Job cuts pushed the unemployment rate up one-tenth to a fresh 26-year high at 9.8%. That rate is made worse knowing the average duration of unemployment also sits at a record high of 26.2 weeks. Indeed, more than one-third (35.6%) of the unemployed have been jobless for 27 weeks or more.
Since the recession hit the economy in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled.
“The axe swung hard and it swung wide,” said Jennifer Lee from BMO Capital Markets. “All industries, save information, passed out pink slips during the month.”
Job losses in September were worse than August’s decline of 201,000, but a wider lens shows that declines have moderated significantly from earlier in the year. Average monthly losses from May to September were 307,000, less than half the average of 645,000 per month from November 2008 to April.
The report also said average workweek hours was cut back slightly, while earnings only advanced marginally (details below.)
“The economy went off-roading in September, but will get back on road to recovery,” Lee added.
Losses by Sector:
Construction jobs fell by 64,000 in September, just below the monthly average of 66,000 for the past five months and well below the average of 117,000 per month from November to April. In line with yesterday’s construction spending report, the losses were concentrated in the nonresidential side (-39,000) and heavy construction (-12,000). Since December 2007, employment in construction has fallen by 1.5 million.
Manufacturing employment declined by 51,000, in line with the three-month average of 53,000 per month, and well below the monthly loss of 161,000 from October to June. Employment in manufacturing has contracted by 2.1 million since the onset of the recession.
Jobs in the service sector fell by 39,000, 10k more than the average from April to September. That’s still a moderation from the average monthly loss of 68,000 in the prior 6-month period.
Government employment slashed by 53,000 in the month, with the largest decline occurring in the non-education component of local government
Health care was the only sector continuing to increase in September. About 19,000 were created in the month, with the largest gain occurring in ambulatory health care services (15,000). Since the start of the recession, the health care sector has added 559,000 jobs to the economy.
Other: Jobs in transportation and warehousing continued to trend down in September; little or no change was seen in the financial sector, professional & business services, leisure & hospitality, and information.
Other Key Details:
The average workweek edged down by 0.1 hour to 33.0 hours. (Both the manufacturing workweek and factory overtime decreased by 0.1 hour, to 39.8 and 2.8 hours, respectively.)
Average hourly earnings edged up by 1 cent, or 0.1%, to $18.67. Over the past 12 months, average hourly earnings have risen by 2.5%, while average weekly earnings have risen by only 0.7% due to declines in the average workweek.
“For the quarter, aggregate hours were down -3.0% at an annualized pace, an improvement versus Q2’s -7.8% annualized decline,” said Joseph LaVorgna, chief US economist at Deutsche Bank.
The number of discouraged workers ― those not currently looking for work because they believe no jobs are available ― rose to 706,000 in September, a rise of 239,000 compared to last year.
The all-in unemployment rate (basic rate + discouraged workers + involuntary part-timers) rose two-tenths to a record 17%.
Also note that annual benchmark revisions indicated that earlier cuts were even deeper than originally reported. The new estimates say 824,000 more jobs were cut than previously thought, which is the largest downward revision since records began 25 years ago.
Markets saw a huge sell-off yesterday and that was only on mixed news. Today’s report is genuinely bad so another sharp decline should be expected. Equity futures were already trading lower prior to the release. The worse-than-expected figures caused the decline to deepen.
“The trajectory for jobs looks weak heading into 2010, and we continue to recommend taking profits in long positions in stocks,” said analyst John Herrmann after the report. “Stocks may have hit their highs for the year in September 2009.”