Unemployment soars to 10.2 percent faster than expected

Friday, November 6, 2009

by Melissa Gruz for the BBC's Biodun Iginla

| Fri, Nov 6, 12:00 AM

Sonja Jackson, of Detroit, holds a Employment Guide standing in line while attending a job fair in Livonia, Mich., Wednesday, Nov. 4, 2009. The number of newly laid-off workers filing claims for unemployment benefits last week fell to the lowest level in 10 months, evidence that job cuts are easing as the economy slowly heals. The number of newly laid-off workers filing claims for unemployment benefits last week fell to the lowest level in 10 months, evidence that job cuts are easing as the economy slowly heals.(AP Photo/Paul Sancya) View more photos WASHINGTON -- The nation's unemployment rate leapt up by a larger-than-expected four-tenths of a percentage point in October to 10.2 percent, even as the pace of job losses slowed sharply, the government reported Friday.
Employers shed 190,000 jobs in October, the slowest pace since near the beginning of the devastating recession that began in December 2007. The Labor Department also revised its August and September jobless numbers to reflect that 91,000 fewer jobs were lost over those two months than first thought.
Those trends are positive because they suggest that the torrid pace of job losses has slowed. That's supported by recent economic growth numbers that showed 3.5 percent growth from July through September.
In another positive sign, the professional and business services sector added 18,000 jobs in October, indicating that a sector beyond health care and education finally is seeing job growth. Temporary employment, which usually precedes a return to hiring, was up by almost 34,000 in October, the third straight month of gains.
The surge in the unemployment rate, which is now at its highest level since April 1983, is likely to overshadow any good news on the growth front, however.
"You can't see an unemployment rate of 10.2 percent and not be concerned," Christina Romer, the head of the White House Council of Economic Advisers, acknowledged on CNBC television.
Many economists expected unemployment to hit 10 percent this year, but few thought that it would get this high by October.
"Small and midsized businesses are still shedding workers. Unlike big businesses who have been able to stabilize profits and have access to credit, small and midsized businesses are low on cash and can't get credit," said Mark Zandi, the chief economist for forecaster Moody's Economy.com in West Chester, Pa. "The job market isn't deteriorating as fast as it was earlier in the year, but it isn't going to improve until next spring at the earliest."
When discouraged workers and underemployed workers are factored in, the unemployment rate stands around 17.5 percent. Most troubling, 35 percent of the jobless, about 5.6 million Americans, have been unable to find work for more than six months. This grim figure was largely unchanged in October.
Some analysts viewed the sharp jump in unemployment as a statistical aberration.
"While the politics will focus on the spike in the unemployment rate to 10.2 percent, the economics of the move make little sense, and we think it's mostly a product of the small sample that the household survey is based on," forecaster RDQ Economics said in a research note Friday morning.
RDQ, which is based in New York, noted that labor force participation fell in October, which serves to hold down the unemployment rate, and still the controversial survey used to calculate unemployment rose.

"The payroll change, with the significant upward revisions to August and September, provide further confirmation that economic activity is expanding at a fairly solid pace once the brisk rate of productivity growth is factored in," RDQ said in the note.
The reference stems from a Labor Department report Thursday that showed that productivity surged at an annualized rate of 9.5 percent from July to September. It suggested that companies were squeezing more out of their work forces, fomenting what's expected to be a jobless recovery initially. Productivity is a measure of the hourly output per worker, and the more that can be produced with the fewest workers, the more productive -- and likely profitable -- a company can be.
Just as Democrats did last year, Republicans fired off statements less than 15 minutes after the jobs report was released blaming the Obama administration for the problems in the jobs market.
"Since President Obama's inauguration, the nation has watched the unemployment rate continue to climb, and unfortunately the month of October was no different," the Republican National Committee said. "With so many families looking for work, it is time the Obama administration stop spreading their phony 'saved or created' talking points and start creating the dependable jobs America needs."
The October job losses reflect the 22nd consecutive month that employers shed jobs, the longest such losing streak since the Great Depression. Nine of those months were under the Obama administration, 13 of them under the Bush administration.
The Labor Department said Friday that employers had shed an average of 188,000 jobs each month over the past three months. That compares favorably with the average of 357, 000 jobs lost in each of the three months preceding that.
Despite that improving picture, the high unemployment rate gives greater urgency to efforts in Congress not only to extend unemployment benefits for the huge number of jobless Americans, but also to consider tax and other incentives for businesses to hire.
"Unemployment has now exceeded what some thought would be the peak rate we would attain. With such a huge fire we need every hose we can find to put it out," said Lawrence Mishel, the president of the Economic Policy Institute, a liberal policy-research group.
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OCTOBER EMPLOYMENT BY SECTOR:
_Construction, fell by 62,000.
_Manufacturing, down 61,000.
_Leisure and hospitality, down 37,000.
_Retail, off 40,000.
_Government, unchanged
_Professional and business services, plus 18,000.
_Health care and education, plus 45,000.
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October jobs report Posted by BiodunIginla at 8:31 PM Labels: bbc biodun iginla, us unemployment 0 comments:

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