U.S. firms slashed 533,000 jobs from payrolls in November as the unemployment rate jumped from 6.5 percent to 6.7 percent, the highest jobless rate in more than 15 years, the Labor Department reported Friday morning.
It was the most jobs lost in a single month since the economy jettisoned 602,000 workers in December 1974. The November payroll decline far exceeded projections of economists, who expected a loss of about 340,000 jobs.
Employment declines for September and October were upwardly revised by a total of 199,000. It was the 11th consecutive month of job losses. Following payroll cuts of 403,000 jobs in September and 320,000 jobs in October, the economy has now shed 1.26 million jobs during the last three months. It is the largest three-month plunge since 1.34 million jobs were lost during December 1974 and January and February 1975.
November’s job losses and the September and October revisions were “much worse than were expected and represent wholesale capitulation. The threat of widespread depression is now real and present,” said Peter Morici, a business professor at the University of Maryland.
“A very ugly set of numbers tells us that the job market has collapsed in the last three months,” said Stuart Hoffman, chief economist of PNC Financial Services Group in Pittsburgh. “The economy has become a whirlpool that is sucking down everything from the job market to the stock market.”
Mr. Morici also took issue with the reported jobless rate of 6.7 percent in November. “Factoring in discouraged workers, unemployment is closer to 8.7 percent,” he said. “Add in part-time positions that cannot find full-time employment, and the hidden unemployment rate is nearly 13 percent,” which he expects will eventually approach 20 percent.
The stock market greeted the dismal employment news by declining about 2 percent during the first half hour of trading. The Dow Jones Industrial Average was down 171 points to 8,206. The broad-based Standard & Poor’s 500 stock index was off 18 points at 827. The tech-heavy Nasdaq composite index fell 28 points to 1,417.
Job losses since the beginning of the year total 1.91 million. The private sector has lost 2.12 million jobs so far this year, while the government sector has added 211,000 jobs. Government payrolls, which expanded by 7,000 workers in November, have declined only one month (September) this year.
Earlier this week, the National Bureau of Economic Research (NBER), the official arbiter of the business cycle, announced that the U.S. economy entered a recession last December. The NBER said the plunge in payroll jobs proved to be the most important statistic in its conclusion that the recession began a year ago.
Job losses in November were nearly across the board. In the Labor Department’s major categories, except for government, only the education and health services sector added jobs (52,000) in November.
Construction Jobs fell by 82,000. Manufacturers shed 85,000 jobs last month.
Employment in service industries contracted by a startling 370,000. The retail trade sector lost 91,000 workers. There were 136,000 fewer employees laboring in professional and business services. The leisure and hospitality sector lost 76,000 jobs.
November’s employment data and other indicators reveal that the economy has deteriorated significantly during the current quarter.
The manufacturing index for November declined to its lowest level since 1982, according to the Institute for Supply Management (ISM). The ISM’s service index plunged by 7.1 points to 37.3 in November, the lowest reading in the 11-year-old index. ISM index levels below 50 indicate contraction.
The Federal Reserve’s Beige Book, a compendium of economic conditions across the country, revealed this week that nearly every one of central bank’s districts reported softening labor and real estate markets, declining sales, falling manufacturing and tighter credit conditions.
After declining 0.3 percent during the third quarter, U.S. gross domestic product in the fourth quarter is expected to plummet as much as 4 to 5 percent at an annual rate, according to the economic forecast by IHS Global Insight. Goldman Sachs has projected an unemployment rate of 9 percent by the end of next year.