Job losses up in October
Unemployment rate surges to 6.5%
By Tom Stundza -- Purchasing, 11/5/2008 6:48:00 PM
U.S. job losses accelerated the last two months, pushing the unemployment rate to 14-year highs in October. Nonfarm payrolls, which are calculated by a survey of establishments, tumbled a larger-than-expected 240,000 in October. The unemployment rate, which is calculated using a survey of households, soared 0.4 percentage point to 6.5%, its highest since March 1994.
More than 760,000 jobs have been lost this year through September, according to data from the Bureau of Labor Statistics, and joblessness is getting worse: Outplacement firm Challenger, Gray & Christmas says employers announced another 112,884 job cuts in October. That’s 79% more lost jobs than in October of last year. Payroll services firm ADP says jobs fell 157,000 in October, with more than 75% of drop coming from goods producers. The pullback was broad-based, including manufacturing, construction and most service industries. Excluding a rise in government payrolls, private-sector employment plummeted even further last month.
The number of new people filing for unemployment benefits, released every Thursday morning by the Labor Department, has been running between 450,000 and 500,000 a week lately. "When you see those numbers start to come down below 400,000, that'll be a very good sign that the worst of the pain is over," says Brian Wesbury, chief economist at First Trust Advisors.
Hiring last month in goods-producing industries fell 132,000. Within this group, manufacturing firms cut 90,000 jobs. Construction employment was down by 49,000. Service-sector employment fell sharply for a second-straight month. Labor-intensive services make up the vast majority of employment and usually cushion downturns. Yet business and professional services companies shed 45,000 jobs -- the ninth drop in 10 months -- and financial-sector payrolls were down 24,000.
Retail trade cut over 38,000 jobs, with losses concentrated at automobile dealers and department stores. Leisure and hospitality businesses shed 16,000 jobs. Temporary employment, which economists consider a bellwether for future job prospects, fell more than 50,000. Continuing a recent trend, job gains were concentrated in health care, which tends to be more labor intensive and less productive than manufacturing and other services. Health services employment rose 26,000. The government added 23,000 jobs.
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