New jobs numbers portray an economy in near free fall

New jobs numbers portray an economy in near free fall
By Kevin G. Hall | McClatchy Newspapers
1/9/08

WASHINGTON " The U.S. recession gathered steam in December as employers shed another 524,000 jobs, the unemployment rate leapt half a percentage point to 7.2 percent, the length of the average workweek fell to a record low and job losses were spread widely across almost all sectors of the economy, the government said Friday.

December's unemployment rate was the highest since January 1993, and was up by much more than expected over November's rate of 6.7 percent, according to the Labor Department. The December job losses brought the full-year total to more than 2.6 million.

There was little to cheer in the report from the Bureau of Labor Statistics. Although the December job losses were just a touch higher than the consensus forecast, many analysts think that they'll be revised next month.

Several state employment offices saw their computer systems crash in December with the soaring number of people who were seeking jobless benefits, and this may have resulted in a number lower than it really is.

The Labor Department also revised its employment reports from October and November, noting that job losses in those months were worse than first reported. Employers rid themselves of 423,000 jobs in October, not the originally reported 320,000, and 584,000 positions in November, not the 533,000 first reported by the BLS.

While the steep jump in unemployment and mounting job losses grabbed the headlines, there was even more troubling news buried deeper down in the report. The BLS said that the average hourly workweek for production and nonsupervisory jobs had shrunk 0.2 percent to 33.3 hours. That marks the lowest that this number has registered since the government started compiling these statistics in 1964.

"The message in the decline in hours worked to a record low is that more big job losses are coming," said Mark Zandi, chief economist of Moody's Economy.com, a forecaster in West Chester, Pa. "Employers first cut their employees' hours and then their jobs if business doesn't quickly improve."

It's hard to see how business will improve anytime soon. The December jobs numbers point to an economy in near free fall, as the BLS said 1.9 million jobs had been lost in the final four months of 2008. In all, 11.1 million Americans are thought to be unemployed.

"In December, job losses were large and widespread across most major industry sectors," the BLS employment report said.

Manufacturers shed 149,000 jobs in December and 791,000 for all of last year. The biggest manufacturing losers were metal-makers and companies that make cars and car parts. Construction fell by 101,000 jobs in December and by 899,000 since its peak in September 2006.

Retailers dropped 67,000 positions in December and 522,000 last year, more than half of those jobs lost in the last four months of 2008. Warehousing and transport employment fell by 24,000 jobs in December, while the information industry lost 20,000 positions. Food services fell by 20,000 last month.

Only health care showed robust growth, adding 32,000 jobs in December and 372,000 positions last year. "The decline in jobs across so many industries and occupations is disturbing. There is no safe place in the job market," Zandi said.

In another troubling indicator, the number of involuntary part-time workers, those who want to work full time but can't find such jobs, rose to 8 million in December and increased by 3.4 million for all of last year.

Additionally, the number of long-term unemployed " jobless for 27 weeks or more " rose to 2.6 million in December and increased by 1.3 million for all of 2008. This number essentially doubled as many of the unemployed remained that way for much of the year.

Read the BLS report.