Economists used strong language to characterize the worse-than-expected nonfarm payrolls report for October. The monthly loss was below expectations, but it was revisions to the prior two months and a surge in the unemployment rate that carried further negative implications for the U.S. labour market and the economy as a whole.
Paul Ashworth, senior U.S. economist at Capital Economics, said the report confirms "that the US economy is not only in a recession, but a potentially severe recession that could last for some time."
U.S. nonfarm payrolls declined for the tenth straight month, falling more than expected by a total of 240k jobs in October, according to the Bureau of Labor Statistics on Friday. The previous two months saw huge downward revisions for a combined loss of 411k jobs rather than the 232k originally reported.
"As for the September revision, the 284k job loss marked the worst one-month labor market performance since October 2001 and the fifth worst monthly result in the last quarter-century," noted Guy Lebas, fixed income strategist at Janney Montgomery Scott.
With the impact of the revisions, the three-month average in monthly losses is now 217k, and total net losses to date in 2008 moved up to 1.179 million, from just 760k in September's report.
The unemployment rate soared up to a 14-year high at 6.5% (6.502%), well above the consensus call for 6.3%.
"In short, horrible in every way," commented Ian Shepherdson, chief U.S. economist at High Frequency Economics. He said the Boeing strike depressed manufacturing by 27k jobs, while the unemployment rate "is rising almost vertically," and wages were depressed with only a 0.2% rise.
The only positive gains in the report were in areas outside the business cycle: Government jobs increased by 23k and education & health care advanced by 21k. In the revisions for September, however, all sectors were in decline. Government jobs were originally reported to have advanced 9k, but are now estimated to have fallen 41k, while the initially reported 25k gain in education & health care is now a drop of 16k jobs.
"However you slice and dice this report, it is extremely weak," added economists from RDQ. They noted that the data come from mid-October, and as claims for unemployment benefits continued to deteriorate in the month, another weak report is likely to be seen in November.
RDQ added: "Dear President-Elect Obama, the honeymoon is over and we await your economics transition team with great interest."
By Patrick McGee and edited by Sarah Sussman
©CEP News Ltd. 2008