The headline job losses in December were roughly as expected -- 524,000 jobs lost. However, traders were prepared for a much larger number, so the first reaction will likely be positive. The unemployment rate rose to 7.2% (highest since 1993).
The average hourly work week slid to 33.3 hours, and since this number is a leading indicator, it suggests even more job losses yet to come, since most employers cut hours worked before they cut the jobs themselves. This is the lowest average workweek figure in history since records were began in 1964. The implication of this is that job losses will continue to accelerate over the coming months! It is still getting worse!
The revisions for the previous six months (June - November 2008) have increased the job losses for each of those months. Most troubling to me was that service-sector job losses represented more than half the losses in December, since in previous months, this sector had remained fairly resilient and job losses were minimal. This suggests that job losses are spreading and broadening. This was the worst annual job loss in the United States since World War II!
From my experience, the initial reaction of the financial markets is usually short-lived. As economists begin to study the underlying internal numbers and react to those over the weekend, we may see a different reaction on Sunday evening or Monday morning.
From the U.S. Bureau of Labor Statistics website (pay particular attention to the household survey -- it is usually the most telling):
From my experience, the initial reaction of the financial markets is usually short-lived. As economists begin to study the underlying internal numbers and react to those over the weekend, we may see a different reaction on Sunday evening or Monday morning.
From the U.S. Bureau of Labor Statistics website (pay particular attention to the household survey -- it is usually the most telling):
Nonfarm payroll employment declined sharply in December, and the unemployment rate rose from 6.8 to 7.2 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Payroll employment fell by 524,000 over the month and by 1.9 million over the last 4 months of 2008. In December, job losses were large and widespread across most major industry sectors.
Unemployment (Household Survey Data)
In December, the number of unemployed persons increased by 632,000 to 11.1 million and the unemployment rate rose to 7.2 percent. Since the start of the recession in December 2007, the number of unemployed persons has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points.
