There should now be no doubting the depth and misery of the approaching US recession.
Friday’s employment data was the most horrific report in years. In the space of a couple of reports from the US Government, job losses ballooned from just over 700,000 in the 9 months to September, to close to 1.2 million in the 10 months to October.
There are 305 days this year from January 1 to October 31 and on every one of them, more than 3,800 people on average were losing their jobs: but that disguises the damage felt in September and October when the rate soared to nearly 8,600 a day.
From being a lagging indicator, which means the number of jobless remains behind the slowing pace of the economy, America’s jobless figures have caught up very rapidly.
Goldman Sachs economists said Friday they saw economic growth this quarter contracting by 3.5%, a bigger figure than any other forecast so far.
That points to more months where the job losses will top 200,000, as September and October’s have done: 240,000 went from US payrolls in October and the jobless rate shot up to a 14-year high of 6.5%, topping the rate in the 2001 recession. But more worryingly, job losses in September and August were deeper than previously thought.
The economy shed 284,000 jobs in September, the most since November 2001 127,000 went in August. That meant 179,000 more jobs were cut in August and September than previously reported. September’s forecast initially was a horrid 159,999, the worst so far this year. It remains that, but there’s every chance October’s figure will be revised again in coming months. This year so far has seen 1.2 million jobs lost with more than half that number, 651,000, shed in the past three months alone.
It makes a mockery of fears in this country about unemployment reaching 5.75% to 6% or more by 2010. The US is already there and losing thousands of jobs a day. Our rate of 4.3% was unchanged in October and even if the new series is cheaper and less accurate than the old one pre-July survey, the point is that unemployment in most major economies will end up far worse in this slowdown than we will experience here, tough as it will be for many in Australia.
In Britain, figures this week are expected to show that UK unemployment has topped 1.8 million people, the highest level since 1998. That will boost the unemployment rate past the current 5.7%. compared with the 6.5% in the US at the end of last month.
UK economists are now forecasting that the number of jobless could hit 2.7 million by 2020, an unemployment rate of 8%.
Friday’s US figures were much worse than the Wall Street forecast: economists had expected a loss of 200,000 non-farm jobs in October and a jobless rate of 6.3% from the 6.1% rate in September.
For some months economists thought this would be a relatively mild slowdown because the rate of job losses was low: less than 100,000 up to August and then September. But October’s surge and the huge revisions put that theory to rest.
In another sign of weakness, a growing number of workers were unable to find jobs with the amount of hours they want to work. Those working part-time jobs — because they couldn’t find full-time work, or their hours had been cut back — jumped by 645,000 people to 6.7 million, the highest since July 1993.
The so-called under-employment rate, which counts those part-time workers, as well as those without jobs who have become discouraged and stopped looking for work, rose to 11.8% from from 11%, matching the all-time high for that measure since calculations for it began in January 1994.