The dreaded and feared employment data is out, and it isn’t pretty. Unemployment came in at 7.6% and the change in non-farm payrolls was -598,000.
Dow Jones had estimates at 7.5% unemployment and non-farm payrolls coming in at -525,000 jobs. Bloomberg had estimates from economists being 7.5% unemployment and non-farm payrolls at -524,000. We heard many outside calls as recently as yesterday for a report closer to the vicinity of -600,000 non-farm payrolls.
Average hourly earnings came in at +0.3% were expected to be +0.2%; and the average work week came in at 33.3 hours as expected.
There is something to consider here though that would be blasphemy toeconomists. What if we told you that this report did not mattercompared to the other data? Yep… this report only established the urgency to pass whatever stimulus package comes next week. Now no one will care about pay caps. They just will demand the passage. Economists will immediately turn to the bank rescue and stimuluspackage. The numbers here were either going to be just bad or reallybad. Celebrating this would be like celebrating when you come back from LasVegas after you “only lost $800.00” gambling.
We have been predicting that layoffs in retail and services sectors will only be a part of the comingunemployment worries. Retail and restaurant workers are sliding farfaster than you would have guessed a year ago. This is going to getworse. Much worse. President Obama has already warned in many of hisspeeches that millions of more jobs will be lost.
To add fuel to the fire, there are many who believe that if you addedin all of the workers who have given up looking for work, those who areworking part-time to survive that can’t find full-time comparable work,and those who are working greatly under their means that unemploymentis already north of 12%.
Our call is that we see a minimum of 8.5% unemployment, by the end ofsummer. There are some economists now already calling for north of 9%who thought that unemployment would peak at 7% just a few months ago.And then there are some who believe 10% is headed our way by late 2009or into 2010.
UPDATE AT 8:37 AM….. To make matters even worse, the full revisions for all of 2008 show that we lost almost 3 million jobs. That is about 400,00 more than we were originally told about. Those Labor Department computers sure are reliable. We have now lost 3.5 million jobs since January 2008.
Over 200,000 of these losses came from manufacturing companies, with construction being 111,000. Service sector lost 279,000 jobs, with a breakdown of 121,000 business and professional, financial at -42,000, and retail at more than -45,000.
Again, temporary workers fell by over 76,000. You won’t see ANY help in the economy until there are sizable gains in temporary jobs as that is the first hint that business is at least trying to add workers on the cheap.
Again, healthcare and education were up. That was by 54,000. And government added 6,000. Those are considered line-items by most and quasi-governmental or subsidy jobs that are not service or manufacturing GDP contributors.
Jon C. Ogg
February 6, 2009