The Employment Situation, October 2008
October nonfarm payrolls fell by 240,000, for the tenth straight month of decline this year. October’s decline in payrolls was slightly worse than consensus expectations, which called for losses in the vicinity of 200,000. August and September figures were revised down by a total of 179,000 jobs, changing losses for those months from 73,000 to 127,000 in August and 159,000 to 284,000 in September. In fact, September now marks the largest monthly loss since November 2001. Average employment losses in the four most recent recessions ranged anywhere from 120,000 to 180,000 per month, although much larger losses occasionally occurred in a single month. Cumulative losses for the U.S. economy have reached 1.2 million jobs since January, when the downward slope began. [For a look at how payroll employment numbers have changed in recent recessions, see this article.]
The unemployment rate also jumped a surprising 40 basis points, to 6.5 percent, a higher level than that reached in the 2001 cyclical downturn. The rate is up 170 basis points over the same time last year, leaving it at its highest level since March 1994.
The diffusion index of employment change sank slightly further from 38.1 to 37.6 in October after a steep fall all the way from 46.2 the previous month. An index reading below 50 indicates that more employers are cutting jobs than adding them, and this past month’s movement indicates that an even greater share of employers have now begun to cut jobs. The index has not looked this poor since June 2003.
Job losses were widespread, with every major sector observing declines except education and health services (+21,000) and government (+23,000). Payrolls in goods-producing industries were shaved down by 132,000, with 90,000 of those losses attributable to manufacturing and 49,000 to construction. Manufacturing took the worst hit since July 2003, with 75,000 workers losing jobs in durable goods manufacturing and 15,000 losing jobs in the nondurable goods category. Transportation equipment manufacturing is responsible for a large chunk of losses within durable goods (40,100).
Service-providing industries dropped 108,000 jobs in October, on the heels of a loss of 201,000 in September. The trade, transportation, and utilities sector performed similarly to September, losing 67,000 jobs. Within this sector, retail trade lost 38,100 jobs, with auto dealers (−20,300) and department stores (−18,000) faring particularly poorly. Professional and business services shed 45,000 jobs, with employment services (−50,000) being the biggest loser in this category by a long shot. Financial activities (−24,000) posted its worst decline since the series began nearly 70 years ago, and leisure and hospitality shed 16,000 jobs. As stated earlier, the only positive sectors were education and health services and government, although downward revisions to both of these categories turned their September gains into slight one-month losses. Neither of these two sectors had lost jobs for at least a couple of years.
Labor Market Conditions
|Average monthly change
(thousands of employees, NAICS)
|Heavy and civil engineering||4||3||−1||−5||−4.3|
|Temporary help services||17||1||−7||−29||−33.6|
|Education and health services||36||39||44||43||21|
|Leisure and hospitality||23||32||29||−3||−16|
|Local educational services||6||6||5||4||23.2|
|Civilian unemployment rate||5.1||4.6||4.6||5.3||6.1|
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.
Last month, the three-month moving average of private sector employment growth slipped lower, to −215,000 from −163,000 in September. September’s moving average was substantially lowered from 126,000 losses, due to two months of downward employment revisions.