Friday, January 09, 2009
The Labor Department reported a massive 524,000 decline in nonfarm payrolls during the month of December and an unemployment rate of 7.2 percent, the highest in 16 years.
Downward revisions to prior data totaled 154,000 - October's 320,000 decline worsened to 423,000 and November's tally of 533,000 moved to 584,000 - bringing the aggregate job loss in this report to 678,000, just below the November report's whopping 732,000.
For the year 2008, net job losses were 2.6 million, the largest total since 1945, however, this is likely to be revised much higher later in the year when benchmark revisions are performed.
During the last "turning point" in the economy, a period during which the Labor Department's birth-death modeling performs particularly badly, more the 800,000 jobs were added to the data series as we were coming out of the 2001 recession.
This time, there are likely to be similarly large downward revisions to the already abysmal payrolls data, pushing the 2008 job loss closer to 4 million. An initial estimate of these revisions is due next month with the final revisions to be reported in the fall.
By category, job loss was most severe in manufacturing which posted a decline of 149,000, followed by trade, transportation, and utilities and then professional and business services.
The health care industry added 45,000 new jobs in December and total government payrolls rose by 7,000. Surprisingly, state and local governments continue to add jobs, but this is likely to change unless states, their budgets now awash in red ink, receive financial aid from the federal government.
In clear signs of how quickly the U.S. economy has deteriorated in recent months, the venerable "food services and drinking establishment" category (within the leisure and hospitality group) posted a net job loss of more than 20,000 last month and retail sales (within the trade, transportation, and utilities group) plunged 66,000.
American consumers are consuming much less these days - both at stores and at restaurants.