Over half a million jobs got slashed in November, the steepest monthly decline in more than three decades and the 11th straight month of net job losses. The report suggests the U.S. recession is deeper than previously expected, which supports the notion that the Federal Reserve will take unconventional actions to revive the economy.
U.S. nonfarm payrolls plummeted way beyond expectations as 533,000 jobs vanished in November, according to the Bureau of Labor Statistics on Friday. In the past three months, more than 1.2 million jobs have disappeared, which has pushed the unemployment rate to 6.7%, its highest level since 1993.
HFE chief U.S. economist Ian Shepherdson called the massive decline in November payrolls "almost indescribably terrible," noting that in the past six months alone, 1.55 million jobs have vanished, which is nearly as much as all of the losses in the 2000-01 recession.
"The pace of job losses is accelerating alarmingly, as this report attests, with steep drops in most sectors but the biggest deterioration [is] in services -- as flagged by the collapse in the ISM nonmanufacturing employment index -- down 370K in Nov after 153K in Oct." He also pointed out that education & health care jobs advanced by 59k, suggesting the core private payrolls are even worse than the headline.
The previous two months were revised down by 199k for a combined loss of 723k jobs. October's estimate was revised to a decline of 320k jobs from an originally reported decline of 240k, while September's figure was downwardly revised to a loss of 403k jobs from the previously reported decline of 284k jobs.
The revisions for September are significant because the recorded losses took place before the collapse of Lehman Brothers, an event many pundits have blamed for sparking the latest phase in the 15-month credit crunch.
John Ryding and Conrad DeQuadros from RDQ said the report is consistent with a 5% decline in fourth-quarter real GDP, compared to the 0.5% decline seen in the third quarter.
"An employment decline of the absolute magnitude over the last three months has only been seen before in the first quarter of 1975," they added.
A similarly dismal employment report was released for Canada earlier in the morning. Canada suffered its biggest monthly setback in more than a quarter century in November as 70,600 jobs disappeared from the economy, the majority of them in Ontario, Statistics Canada reported. Canada's unemployment rate is now 6.3%.
By Patrick McGee and edited by Sarah Sussman
©CEP News Ltd. 2008