Firday’s all-important Employee Situation Report certainly wasn’t pretty, with 240,000 jobs lost in October versus estimates of 200,000. The first paragraph of the release from the Bureau of Labor Statistics deserves to be read in it’s unedited form:
Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. October’s drop in payroll employment followed declines of 127,000 in August and 284,000 in September, as revised. Employment has fallen by 1.2 million in the first 10 months of 2008; over half of the decrease has occurred in the past 3 months. In October, job losses continued in manufacturing, construction, and several service-providing industries. Health care and mining continued to add jobs.
Phew. Bloomberg added that the unemployment rate is at its highest level since 1994, while the total number of unemployed people sits at a 25-year high.
The most interesting (in an autopsy sort of way) aspect of the report was the huge revision made to the September numbers. After originally reporting a 159k decrease in September, today the number was revised upward by 124,000 jobs to 284k. Not only is that just a huge revision, but it (for now) puts the peak of losses in September, while October tracked lower by 40,000.
The devil’s advocate says that the October number is also due for a big revision, because the more volatile the climate, the more volatile we can expect our economic indicators to be also. While we wait for the inevitable upward revision, I looked for Friday’s headline-grabbing numbers to increase the groundswell for infrastructure spending, or other broad job stimulus plans.
Unemployment is generally considered a lagging indicator, but I wonder if that dynamic isn’t changing this time around. We’ve already had several “mini-crises” driving job losses, while only recently have all industries seen broad declines in demand. For now, the most important next step is getting to the true, final number for October. To me, that’s the month of utter collapse, and investors need complete transparency on just how bad things really became.
If we add in the breakpoint for expansion of the labor force (generally pegged at growth of 150,000 jobs), we are currently tracking at least 400,000 jobs per month below what the economy needs to grow its most vital organs…We, the spender.