This morning's jobs report shows a major leap in the unemployment rate--from a revised 6.8 percent to 7.2 percent. That increase is huge, particularly given that we spent a month believing November's unemployment rate was 6.7 percent.
Employers shed 524,000 jobs in the last month of the year, the Labor Department reported. December's job losses were still not as large as those in November--when employers cut 584,000 jobs, according to revised data. Today's numbers are a little worse than economists had expected, but probably not as bad as the market had feared, Morgan Stanley economists Ted Wieseman and David Greenlaw said in a morning note.
Market expectations took a dive on Wednesday when the ADP employment report showed 693,000 private-sector jobs lost in December. Those with sound minds did, however, note that ADP had revised its methodology before the report, so a wait-and-see approach was probably wisest.
The Labor Department reports that the number of unemployed has jumped by 3.6 million since the start of the recession in December 2007. U-6 watchers will note that the number of unemployed, plus the number of marginally attached and part-time workers (who want full-time jobs) has risen to 13.5 percent of the workforce, from 8.7 in December 2007. (U-6 is an "alternative measure of labor underutilization" used by the Labor Department.)
Some points from Joshua Shapiro, chief U.S. economist at MFR: "All in all, another terrible job market report. For 2008 as a whole, nonfarm payrolls fell by almost 2.6 million (about 75% of which occurred in the final four months of the year), which was the most in absolute terms since 1945."
(Keep in mind when looking at numbers that the labor force has grown dramatically--by about 50 percent since the early 1980s.)