Friday, October 03, 2008
The Labor Department reported nonfarm payrolls fell by 159,000 in September, the sharpest decline since March of 2003, and unemployment held steady at 6.1 percent.
This marks the ninth consecutive month of job losses with a total year-to-date decline of 760,000, a number that is sure to be revised much lower after the annual benchmark revisions are performed.
Over the last year, the Labor Department's birth death model has resulted in the addition of almost 900,000 jobs to the payrolls data. Intended to account for the net creation/destruction of jobs by small businesses which are not yet reporting to state unemployment agencies, by the Labor Department's own admission, this model performs poorly at economic "turning points", so, a doubling of current job losses may be the result after the data is revised.
In September, payrolls were trimmed in all the usual areas with trade and transportation hit unusually hard seeing a net decline of 58,000 positions. A broad decline in retail trade employment accounted for most of these job losses - department stores cut 10,800 jobs and car dealers eliminated 8,600 spots.
Manufacturing employment fell by 51,000, construction payrolls dropped 35,000, professional services payrolls fell by 27,000, and jobs in leisure and hospitality declined by 17,000.
Employment at food service and drinking places (within the leisure and hospitality category) declined by 4,800 in September and fell 7,200 overall in the third quarter. This was the first quarterly decline since the second quarter of 2002 and is one more clear indication that we are now in a recession.
The health care industry continued to add jobs as did the Federal government, however, excluding education, state and local governments reduced payrolls by a combined 18,100, a clear sign of belt-tightening at these levels.