By Alan Rappeport in New York Published: January 9 2009 13:49 | Last updated: January 9 2009 15:03 The US economy’s loss of more than a half million jobs in the past month, revealed in official figures on Friday, offered the starkest evidence yet of the depth of the financial crisis. Non-farm payrolls fell by 2.6m in 2008, their biggest annual drop since 1945. Nearly three quarters of the losses occurred in the last four months of the year. The loss of 524,000 jobs in December was in line with economists’ expectations of 525,000 losses. November’s fall of 574,000 had been the biggest decline since December 1974. Revised results from October and November added 154,000 losses to already grim reports. The jobless rate increased in December to 7.2 per cent from 6.8 per cent in November. It was the first time unemployment rose above 7 per cent since June 1993. Since the beginning of the recession in December 2007 the number of long term unemployed has reached 3.6m, and the unemployment rate has increased by 2.3 per cent to 7.2 per cent, according to Labor Department figures. December job losses were widely spread. The services sector lost 273,000 jobs; manufacturing employment was down by 149,000, the sharpest monthly decline since August 2001; 101,000 construction jobs were lost; and retail employment was off by 67,000. A bright note was healthcare employment, which added 32,000 jobs in December and 372,000 in 2008, education and government work. The number of workers taking part-time jobs because they could not find full-time employment continued to grow in December. Hours worked fell 1.1 per cent to 33.5 hours. The fear now is that the pace of job losses is only gathering further speed as employers move to slash costs to cope with falling demand. A number of companies announced fresh job cuts this week. “We expect labor market conditions to be dreadful for many months to come and consequently for consumer spending to continue to decline,” said Joshua Shapiro, chief US economist at MFR, a research company. Growing job losses has diminished the confidence of those looking for work. The number of people available for work who have stopped looking for at least a month reached 642,000 in December, up 279,000 from the year before. “The current pace of job losses means that the unemployment rate will rise into the 9 per cent to 9.5 per cent range—at a minimum—before leveling off,” said Nariman Behravesh, chief economist IHS Global Insight. The Americans are losing their job at a rapid rate. This is a bad sign. Expect more earning downgrades from Wall Street.
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