Recovery? The 10.2% Without Jobs Might Beg to Differ

Published on
by
the McClatchy Newspapers

Recovery? The 10.2% Without Jobs Might Beg to Differ

by
Kevin G. Hall

WASHINGTON - As bad as Friday's jobs report was, showing October's
unemployment rate jumping sharply to 10.2 percent, the outlook is
likely to worsen for American workers well into next year. Economists
expect the jobless rate to keep climbing, perhaps above 11 percent, as
employers produce more with fewer workers and shy away from hiring.

The nation's unemployment rate leapt by a larger-than-expected
four-tenths of a percentage point in October to its highest level since
April 1983, even as the pace of job losses slowed sharply, the Labor
Department said Friday.

Employers
shed 190,000 jobs in October, the slowest pace nearly since the
devastating recession began in December 2007. The Bureau of Labor
Statistics also revised its August and September unemployment numbers
to reflect that 91,000 fewer jobs were lost over those two months than
first reported.

That
trend is positive. It shows that the torrid pace of job losses in the
first half of the year has slowed dramatically. That supports the
recent report that the U.S. economy grew at a 3.5 percent annual rate
from July through September.

There are other positive signs. The
professional and business services sector added 18,000 jobs in October.
Temporary employment, which usually precedes a return to broader
hiring, was up by almost 34,000 last month, the third straight month of
gains.

Yet the surge in the unemployment rate overshadowed all else.

"History
tells us that job growth always lags behind economic growth," President
Barack Obama cautioned in a statement from the White House Rose Garden,
shortly after he signed a new $24 billion economic stimulus bill into
law. The measure provides tax incentives to homebuyers and extends
unemployment befits for the longtime unemployed. The House of
Representatives passed the measure 403-12 Thursday in a rare bipartisan
vote, a day after the Senate passed it unanimously.

Obama called
the October jobless report "a sobering number that underscores the
economic challenges that lie ahead. ... I won't let up until the
Americans who want to find work can find work and until all Americans
can earn enough to raise their families and keep their businesses open."

When
discouraged workers and underemployed ones are factored in, a more
broadly defined unemployment rate stands at 17.5 percent. Some 35
percent of the jobless, about 5.6 million Americans, have unable to
find work for more than six months.

Many economists had expected
unemployment to hit 10 percent this year, but few thought the rate
would reach that by October. After Friday's sharp jump, they began
revising job forecasts down.

Mark Zandi, the chief economist for Moody's Economy.com, thinks that the jobless rate could hit 11 percent by mid-2010.

"Unemployment
is rising while labor force is declining. Once labor force begins to
rise, this will add to unemployment, as many coming back in will be
unemployed," Zandi said.

Smaller firms, which provide the most
jobs, remain cash poor and credit starved. They're expected to continue
shedding workers or at best holding the line.

"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," Zandi said.

Sageworks
Inc., a financial firm that specializes in data about privately held
companies, reported that small firms will keep cutting payrolls.

"They're
going to reduce their overhead. They're going to reduce their payroll.
They represent at least 50 percent of the employment in the United
States, and that doesn't look like it's coming back anytime soon," Drew
White, the group's chief financial officer, told McClatchy.

Only
four sectors of privately held companies are showing revenue growth
before expenses this year, he said: health care, utilities, education
and information.

Still, some analysts found grounds for optimism.

"What
people aren't talking about today and won't talk about for a couple of
days is that if you take the peak of job losses and plot the trend, we
still get to zero jobs lost sometime in the first quarter of 2010. That
means we start adding jobs the next month after we hit zero," Fred
Fraenkel, the vice chairman of investment manager The Beacon Trust Co.,
said in a research note. "Most people are talking about the U.S.
starting to add jobs back in the second half of next year. It looks
like that will start in the first half of the year, not the second
half."

October was 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 under the Bush
administration.

Last month's job losses followed a familiar
script as construction, manufacturing, hospitality and leisure, and the
retail sector reduced jobs. Government hiring was flat. Health and
education showed some positive growth, and in a pleasant surprise,
professional and business services added jobs.

Employers shed an
average of 188,000 jobs in each of the past three months, the Labor
Department said. That's better than the 357,000 jobs lost on average in
each of the three preceding months.

"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
Economics, a New York forecaster, said in a research note.

Productivity
surged at an annualized rate of 9.5 percent from July to September, the
Labor Department reported Thursday. Productivity measures hourly output
per worker, so the new number showed that companies were squeezing more
out of their workers. Rising productivity signals rising profits, the
key to future investment, growth and jobs.

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.

ON THE WEB

October jobs report

 

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