Editor's Note: The following is excerpted from RGE premium content. The full analysis, 'Another Bleak U.S. Labor Market Report,' is available to paid clients.
Unemployment Rate Hits Double Digits
Non-farm
payrolls fell 190,000 in October. This is an improvement from the 219,000
losses in September, but worse than the -170,000 that analysts expected. Monthly job losses are still very high
compared with what we are used to seeing during (or after) recessionary
episodes. This month, the largest losses
were registered in manufacturing (-61,000) and construction (-62,000). In construction, the bulk of the losses came
from commercial real estate. Retail
trade (-40,000) and leisure and hospitality (-37,000) also saw sharp job
losses.
The unemployment rate also rose more than consensus expected,
reaching its highest level in 26 years. RGE
is still expecting the peak in the unemployment rate to be 10.8% in the second
half of 2010. This is well above consensus, which sees the rate trending down
from 10.1% in Q1 2010 to 9.5% in Q4 2010.
The pace of job losses has been falling sharply since the
beginning of the year. In Q1 2009, total
job losses amounted to more than two million.
In Q2, job losses totaled 1.3 million; in Q3, they totaled 700,000. The pace of improvement is clear. Total job losses in this recession are at 7.3
million, the highest registered in the post-War period—and they would be much
higher (over 10 million) if the cut in hours worked were taken into account. Compare this with the recession of the 1980s,
the most severe in term of cumulative job losses before this one, when 2.5
million jobs were lost. In the 2001
recession, job losses stopped at 1.6 million. If we take into account the
official NBER recession dates, they actually reached 2.7 million. As we navigate towards a jobless recovery,
RGE expects total job losses in this downturn to reach 8 million.
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