US Unemployment Horror - 2008

US - 533,000 job lost in November 2008

WASHINGTON (MarketWatch) - U.S. nonfarm payrolls plunged by an astonishing 533,000 in November, the worst job loss in 34 years, the Labor Department reported Friday.

It's only the fourth time in the past 58 years that payrolls have fallen by more than 500,000 in a month. Since the recession began 11 months ago, a total of 1.9 million jobs have been lost. Job losses in September and October were revised much lower.

In addition to the 533,000 lost jobs, an additional 621,000 workers were pushed into part-time work and 422,000 simply dropped out of the labor force.

"This is almost indescribably terrible," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. "The pace of job losses is accelerating alarmingly."
Over the past three months, 1.26 million jobs have been lost, a pace of job destruction exceeded only once since 1945.

"The threat of a widespread depression is now real and present," said Peter Morici, a business professor at the University of Maryland.

The recession "is going to be long and drawn out," wrote Jennifer Lee, an economist for BMO Capital Markets.

The unemployment rate rose from 6.5% in October to 6.7% in November, the highest jobless rate since October 1993. Read the full report.

Job losses were widespread across industries in November. Fewer than a third of industries were hiring in November.

In services-producing industries, 370,000 jobs were lost, a record excluding one month in 1983 when nearly three-quarters of a million workers at AT&T went on strike.

The grim report could set the stage for further responses from Washington to address the recession. The Bush administration promised "aggressive" action, and pressure increased on the incoming Obama administration to craft a sizable fiscal stimulus plan. The large loss of jobs could also boost the chances for the automakers to get a loan from the federal government.

The Federal Reserve is likely to lower its interest rate target at the Dec. 16 meeting, economists said.

The employment report was much worse than expected. Economists expected job losses of around 350,000 in November. They expected the unemployment rate to rise to 6.8%. See Economic Calendar.

"We expect labor market conditions to be dreadful for many months to come and consequently for consumer spending to continue to decline," wrote Josh Shapiro, chief economist for MFR Inc.

Job losses in September and October were revised sharply lower by a total of 199,000. Over the past three months, payrolls have fallen by an average of 419,000 per month, compared with average monthly losses of 82,000 earlier in the year.

An alternative gauge of unemployment -- which includes discouraged workers and those whose hours have been cut back to part-time -- rose to 12.5% from 11.8%. The number of workers forced to work part-time rose by 621,000 to 7.3 million.

Total hours worked in the economy fell 0.9% in November and are down 2.8% in the past year. The average workweek fell to a record-low 33.5 hours in November. The decline in working hours is consistent with a 5% annualized drop in gross domestic product, wrote John Silvia, chief economist for Wachovia.

Average hourly earnings rose by 7 cents, or 0.4%, to $18.30. Average hourly wages are up 3.7% in the past year, close to the 3.8% rise in the consumer price index.

In goods-producing industries, 163,000 jobs were lost, according to a survey of work places. Manufacturing lost 85,000 workers, while construction lost 82,000.

In the services, 136,000 jobs were lost in business services, including 101,000 in employment services, such as temporary jobs. Financial services cut 34,000 jobs.

Retail shed 91,000 jobs, including 24,000 at auto dealers.

Leisure and hospitality industries cut 76,000 jobs

Health and education services industries added 52,000 jobs. Government added 7,000.

In a separate survey of households, the government found that employment fell by 673,000, the largest lost since August 2001. Unemployment rose by 251,000 to 10.3 million. Unemployment has increased 2.7 million during the recession and 2.7 million more have been forced into part-time work.

In November, the labor force fell by 422,000.

The employment-population ratio fell to 61.4% in November from 61.8%. The labor force participation rate fell to 65.8% from 66.1%.

Crude oil at record low since 2005

Oil prices tumbled to their weakest levels in nearly four years Thursday as investors fixated on mounting signs of recession in the global economy.

On the New York Mercantile Exchange, light, sweet crude for January delivery settled at 43.67 dollars a barrel, down 3.12 dollars from Wednesday's close. It was the lowest crude price since January 2005.

In London, Brent North Sea crude for delivery in January fell 3.16 dollars to settle at 42.28 dollars on the InterContinental Exchange, also at the lowest since January 2005.

In intraday trade the New York contract fell as low as 43.51 dollars and the London contract dropped to 42.04.

Oil prices have lost more than two-thirds of their value since striking record highs above 147 dollars on July 11.

"Fears of a prolonged global recession continued to weigh on sentiment," said Sucden analyst Nimit Khamar in London.

Investors worried about an increasingly marked decline in demand among the industrialized countries, and a slowdown in emerging countries like China.

Dismal economic data piling up in Europe and the United States was signaling the global downturn may be deep and prolonged.

Adding to the gloom, the European Central Bank on Thursday forecast the 15-nation eurozone would be in recession next year, contracting up to 1.0 percent, after predicting only last September 1.2 percent growth in 2009.

Wall Street bank Merrill Lynch forecast crude oil could fall to 30 dollars a barrel in New York if China sinks into the global recession and OPEC fails to cut back production to meet slowing demand.

"A temporary drop to this (30-dollar) level would be technically possible if the global recession extends to China and OPEC fails to cut output sufficiently," Merrill Lynch said in a 2009 energy market outlook report published Thursday.

"With demand vanishing across all key oil-consuming regions, a strong rebound in prices ... is unlikely" in the first half of 2009, Merrill analysts said, forecasting an average 2009 price of 50 dollars a barrel.

The jittery market shrugged off sharp interest rate cuts by four central banks in Europe, including the European Central Bank and Bank of England, aimed at reversing the economic downturn, dealers said.

"The scale of the correction so far would indicate further pain to the downside," Simon Denham of Capital Spreads said.

In the United States, the world's largest economy, telecommunications giant AT&T and other major US companies unleashed a new wave of layoffs amid a deepening recession that saw government unemployment aid swell to a 26-year high.

A US Labor Department weekly report put unemployment insurance claims at a 26-year high, an ominous figure ahead of a key November nonfarm payrolls and unemployment report due Friday, expected to show the loss of 325,000 jobs.

Oil prices began the week sharply lower after the Organization of the Petroleum Exporting Countries (OPEC) decided at a weekend meeting against cutting production and put off any decision until a December 17 meeting.

OPEC president Chakib Khelil said Wednesday there was no "floor" for the price of oil.