01.13.08
Economic Trends
December Employment Situation
December employment fell by 524,000, roughly meeting expectations and bringing the year’s total losses to 2.6 million. Downward revisions to both October and November figures leave those months’ losses at 423,000 and 584,000, respectively. The revised numbers for October and November, coupled with December’s newly reported losses, reveal fourth–quarter 2008 declines exceeding 1.5 million jobs. The unemployment rate also jumped 0.4 percentage point from 6.8 to 7.2 percent in December, the highest rate since January 1993. The number of unemployed rose by 632,000, even as the labor force contracted by 173,000. Unemployment rates for the prior two months were also revised higher, to 6.6 percent in October and 6.8 percent in November.
The diffusion index of employment change also sank a little further from 27.2 to an unprecedented low of 25.4, meaning that only about one–quarter of industries are expanding, while the rest are trimming positions.
Job losses were about evenly split between the goods–producing sector (251,000) and the service–providing sector (273,000). Within the goods sector, onstruction lost 101,000 jobs and anufacturing lost 149,000. Residential construction losses (54,000) were heavier than nonresidential losses (34,000). The greatest manufacturing declines were seen in durable goods (−114), particularly within the motor vehicles and parts and fabricated metal products. Nondurable goods shed 35,000 jobs, with food manufacturing suffering the heaviest casualties.
Last month’s service–sector payroll loss of 273,000 follows November’s even larger loss of 402,000, larger than any loss experienced since August of 1983. Total net losses in the sector this year now total over 1.2 million. The biggest service–sector losers last month were trade, transportation and utilities (−121,000) and professional and business services (−113,000). Auto dealers alone accounted for about one–third of retail trade’s 67,000 payroll cuts. The drop–off in professional and business services this year has been uncharacteristically steep, even in comparison to past recessions. Also within services, information lost 20,000 jobs and financial activities lost 14,000. Declines last month in Leisure and hospitality (22,000) slowed down a bit from the previous few months. The only bright spots in the report, as usual, were in education and health (which gained 45,000) and government (which gained 7,000).
Labor Market Conditions
| Average monthly change (thousands of employees, NAICS) |
||||
|---|---|---|---|---|
|
2006 |
2007 |
2008 |
December |
|
| Payroll Employment | 175 | 91 | −216 | −524 |
| Goods-producing | 3 | −38 | −113 | −251 |
| Construction | 13 | −19 | −53 | −101 |
| Heavy and civil engineering | 3 | −1 | −7 | −12.6 |
| Residentiala | −5 | −20 | −31 | −53.6 |
| Nonresidentialb | 14 | 1 | −15 | −34.3 |
| Manufacturing | −14 | −22 | −66 | −149 |
| Durable goods | −4 | −16 | −50 | −114 |
| Nondurable goods | −10 | −6 | −16 | −35 |
| Service-providing | 172 | 130 | −102 | −273 |
| Retail trade | 5 | 6 | −44 | −66.6 |
| Financial activitiesc | 9 | −9 | −12 | −14 |
| PBSd | 46 | 26 | −57 | −113 |
| Temporary help services | 1 | −7 | −41 | −80.9 |
| Education and health services | 39 | 44 | 45 | 45 |
| Leisure and hospitality | 32 | 29 | −14 | −22 |
| Government | 16 | 21 | 15 | 7 |
| Local educational services | 6 | 5 | 2 | 2.2 |
| Civilian unemployment rate | 4.6 | 4.6 | 5.8 | 7.2 |
a. Includes construction of residential buildings and residential specialty trade contractors.
b. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
c. Financial activities include the finance, insurance, and real estate sector and the rental and leasing sector.
d. PBS is professional business services (professional, scientific, and technical services, management of companies and enterprises, administrative and support, and waste management and remediation services).
Source: Bureau of Labor Statistics.
The three–month moving average of private–sector employment growth dropped to an almost unprecedented low of −516,600 last month. Greater losses were seen only back in February 1975, five recessions ago.
