Abayomi Azikiwe, editor of the Pan-African News Wire, outside the home of Anthony King, who is threatened with eviction by US Bancorp. The event was organized by the Moratorium Now! Coalition on February 18, 2009. (Photo: Alan Pollock)
Originally uploaded by Pan-African News Wire File Photos
Recession Job Losses Top Four Million
By BRIAN BLACKSTONE
WASHINGTON -- The U.S. economy continues to hemorrhage jobs at monthly rates not seen in six decades, a government report showed, signaling that there's still no end in sight to the severe recession that has already cost the U.S. over four million jobs.
The report suggests that households, already seeing the value of their homes and investments plunge, face added headwinds from the labor market, which could put more pressure on consumer spending in coming months.
Nonfarm payrolls, which are calculated by a survey of companies, fell 651,000 in February, the U.S. Labor Department said Friday, in line with economist expectations. However, December and January were revised to show much steeper declines. In the case of December, the revision was to a drop of 681,000, the most since 1949 when a huge strike affected half a million workers. However, the labor force was smaller then than it is now.
The economy has shed 4.4 million jobs since the recession began in December 2007, with almost half of those losses occurring in the last three months alone. And unemployment is lasting much longer. As of last month, 2.9 million people were unemployed for 27 weeks or more, up from just 1.3 million at the start of the recession.
"The sharp and widespread contraction in the labor market continued in February," said Keith Hall, Commissioner of the Bureau of Labor Statistics. Layoffs announcements continued last month across industries including Macy's Inc., Time Warner Cable Inc., Estee Lauder Cos., Goodyear Tire & Rubber Co. and General Motors Corp.
The unemployment rate, which is calculated using a survey of households, jumped 0.5 percentage point to 8.1%, the highest since December 1983 and slightly above expectations for an 8% rate. Some economists think it could hit 10% by the end of next year.
By some broader measures, labor-market conditions are already there. When marginally attached and involuntary part-time workers are included, the rate of unemployed or underemployed workers actually reached 14.8% last month, up almost six percentage points from a year earlier.
Average hourly earnings increased a modest $0.03, or 0.2%, to $18.47. That was up 3.6% from one year ago, as the recession has made it harder for workers to bid up wages. According to the Fed's latest economic summary known as the Beige Book, "a number of reports pointed to outright reductions in hourly compensation costs."
That, in turn, could weigh further on consumer spending.
Friday's numbers suggest that the economy hasn't stabilized in the wake of the fourth quarter's 6.2% slide in gross domestic product, which was the steepest since 1982. Economists expect a decline of similar or even greater magnitude this quarter.
Layoffs Pile Up
"Consumers and businesses are likely to become even more cautious after a bleak report such as this, and if they stop spending, the economy cannot get going again," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi.
There's little Fed policymakers can do on the monetary policy side to stem the slump, given that official rates are already near zero. But the Fed has created a number of credit programs -- financed through an expansion of its balance sheet -- aimed at spurring new lending. Officials this week unveiled a long-awaited initiative aimed at stimulating consumer lending.
Ironically, some of the pressure on labor markets appears to be a byproduct of robust productivity, which is actually a big plus for the economy over the long run. But in the current environment, it seems to be making things worse for workers as nimble businesses shed labor in anticipation of falling demand, which could become a self-fulfilling prophesy.
Hiring last month in goods-producing industries fell by 276,000. Within this group, manufacturing firms cut 168,000 jobs bringing the total since the recession began to 1.3 million.
Construction employment was down 104,000 last month.
Service-sector employment tumbled 375,000. Business and professional services companies shed 180,000 jobs, the fourth-straight six-figure loss, and financial-sector payrolls were down 44,000.
Retail trade cut almost 40,000 jobs, while leisure and hospitality businesses shed 33,000 as households curtail nonessential spending.
Temporary employment, a leading indicator of future job prospects, fell by almost 80,000.
The sole bright spot among private sector industries was health care, which tends to be more labor intensive and less productive than manufacturing and other services. Health care payrolls rose 26,900.
The government added 9,000 jobs.
The average workweek was unchanged at 33.3 hours. A separate index of aggregate weekly hours fell 0.7 point to 101.9.
Write to Brian Blackstone at brian.blackstone@dowjones.com
US unemployment hits 8.1%
By Alan Rappeport in New York
March 6 2009 14:13
US job losses since the recession began rose to 4.4m, as employers in the world’s largest economy shed more than a half million workers for the fourth month running in February, adding to the severity of the economic downturn.
Official figures released on Friday showed that non-farm payrolls dropped by 651,000 last month, while the unemployment rate - 4.4 per cent before the credit crisis – jumped to 8.1 per cent, its highest level since 1983. According to the labour department 12.5m Americans are now unemployed.
The figures were slightly worse than expected, economists having predicted a 650,000 fall in employment and a rise in the unemployment rate from 7.6 per cent to 7.9 per cent. December and January’s figures were revised sharply to show losses of 681,000 jobs and 655,000 jobs, respectively.
Few industries were spared from losses last month. The manufacturing sector lost 168,000 workers, construction lost 108,000 workers, business services cut 180,000 jobs, retail slashed 40,000 employees and leisure and hospitality lost 33,000.
Temporary workers are also suffering, losing 78,000 jobs last month and employment through temporary help agencies is off by 686,000 since the recession began.
A small bright note was that hourly earnings have held steady. Last month they rose by 0.2 per cent, after a 0.3 per cent increase in January. On the year hourly earnings are up by 3.6 per cent.
The grim results on Friday were foreshadowed earlier this week by the monthly ADP Employer Services survey, which on Wednesday said the US private sector shed 697,000 jobs in February. The Institute of Supply Management also reported continued employment contraction in non-manufacturing industries.
Copyright The Financial Times Limited 2009
Friday, March 06, 2009
17:30 Mecca time, 14:30 GMT
US unemployment hits 25-year high
There are now 12.5 million unemployed in the US
US unemployment has risen to 8.1 per cent, the highest level since 1983, according to a US government report.
The US labour department report said on Friday that 651,000 jobs were lost from the struggling US economy in February.
Al Jazeera's John Terrett in New York said the figures were worse than many analysts had been expecting.
The labour department's monthly report on the labour market is seen as one of the best indicators of the state of the world's largest economy, which has struggled amid a global downturn and financial crisis.
Unemployment in US has now reached the highest level since December 1983, when the jobless rate was 8.3 per cent.
There are now 12.5 million people unemployed in the US.
The US economy also lost 681,000 jobs in December and another 655,000 in January, the report said, revising earlier figures upward.
The figures put December's job losses as the worst on record since October 1949, officials said.
In addition, the number of people forced to work part time for "economic reasons'' rose by 787,000 to 8.6 million, the report said.
Stimulus package
US companies are struggling with falling revenues, leading them to cut jobs in huge numbers, a step that is forcing households to further cut spending, creating a vicious cycle for the economy.
Barack Obama, the US president, has introduced a $787bn economic stimulus package, in an attempt to boost the economy through government spending and tax cuts.
The news comes at the end of another bad week for the US economy, in which AIG, the insurance giant, reported $61.7bn quarterly losses, the worst ever for a US company.
On Thursday, auditors also reported "substantial doubts" over the future of General Motors, the US vehicle manufacturer, which is also struggling with huge losses following a sales slump.
'Long-term threat'
Stephen Overall, an analyst from the London-based Work Foundation policy group, told Al Jazeera the global economic crisis was likely to get a lot worse in the coming months.
"We can rest assured that as the recession deepens, unemployment figures are likely to mount up.
"It is also important to remember that when economies return to growth, it can take a number of years for employment to bounce back again to pre-recession levels.
"For example, it took the UK six or seven years to return to what it was to the recession of the early 1990s, so it's quite a long-term threat until we see things return back to normal again".
Source: Al Jazeera and agencies
US private sector cuts 697,000 jobs
By Alan Rappeport in New York
March 5 2009 02:13
The US private sector shed 697,000 jobs in February, a survey of business employment showed on Wednesday.
“The nightmare continues,” said Ian Sheperdson, chief US economist at High Frequency Economics. “Every indicator tells us that employment is tanking across the economy.”
The services sector shrank less than forecast but more than in January. The Institute of Supply Management’s non-manufacturing index fell to 41.6 from 42.9 the month before. Readings below 50 signal contraction.
Results from the monthly ADP Employer Services survey, which tracks private non-farm payroll employment, were worse than expected and followed ADP’s January report estimating a revised 614,000 jobs lost.
ADP changed the methodology of its survey in December after it significantly undershot the US government’s labour report. Last month’s result also undershot the official figures, which showed that 598,000 jobs were lost in January compared with ADP’s original estimate of 522,000.
The grim data were compounded by a pessimistic assessment of the US economy by the Federal Reserve, showing a weakening labour market, consumer demand, manufacturing output and commercial property.
The so-called Beige Book, which collates reports from the Fed’s 12 districts, said that national economic conditions deteriorated during late January and early February and were not expected to pick up until the end of the year or into 2010. Ten of the 12 regional reports indicated weaker conditions or falls in economic activity.
The report suggested that rising unemployment was starting to feed through into slowing or falling wages.
The employment survey showed that the services sector was hit the hardest last month, shedding 359,000 workers. The goods-producing sector lost 338,000 jobs, the 25th consecutive monthly drop, including 219,000 manufacturing jobs and 114,000 in construction.
“Sharply falling employment at medium and small-size businesses clearly indicates that the recession is spreading aggressively beyond manufacturing and housing-related activities,” said the ADP report.
The official non-farm payrolls report, due on Friday, is expected to show 650,000 jobs lost in February, bringing the unemployment rate to 7.9 per cent.
Additional reporting by Alan Beattie in Washington
Copyright The Financial Times Limited 2009
New data underline severity of recession
By Alan Rappeport in New York
March 6 2009 00:57
Evidence of the severity of the US recession continued to pile up on Thursday as data showed business spending was stalling, homeowners were falling further behind on their mortgages, and more workers were joining the unemployment lines.
The data pointing to shrinking business spending and the continued pace of workers filing for unemployment benefits signalled that Friday’s official employment report could be worse than originally feared.
Economists expect the official non-farm payrolls report to show 650,000 jobs were lost in February, bringing the unemployment rate to 7.9 per cent
Factory orders in January declined by 1.9 per cent to $351.9bn (€280bn, £249bn), trailing economists’ expectations, and following a revised drop of 4.9 per cent the month before.
The string of consecutive declines was the longest since tracking began in 1992 and was fuelled by a big drop in orders for expensive durable goods as capital spending has collapsed.
Inventories also fell back in January, declining by 0.8 per cent after 16 months of increases. Unfilled orders were down by 1.7 per cent as demand continued to wane.
New jobless claims stepped back from a 27-year high last week, but companies continued to cut workers at a fast clip.
Initial claims fell to 639,000 in the week ending February 28 from a revised 670,000 the previous week, labour department figures showed.
The number continuing to claim unemployment benefits, meanwhile, declined by 14,000 to 5.1m in the third week of February.
The weekly jobless numbers are considered a volatile gauge of employment. The four-week moving average reached 641,750 last week, 82 per cent higher than a year ago.
“While it was nice to see claims pull back, they are still at their second highest level of this cycle, and still consistent with large payroll declines,” said Abiel Reinhart, economist at JPMorgan Chase.
The US private sector shed 697,000 jobs in February according to the closely watched ADP Employer Services survey, which tracks private non-farm payroll employment, released on Wednesday.
Productivity also fell more than originally thought in the fourth quarter, according to the labour department.
After an initial reading showing that productivity rose during the fourth quarter, the department revised the data to a fall of 0.4 per cent due to falling hours and less output from a shrinking workforce. A bright note was that hourly income continued to rise steadily.
“The bad news is that output is plummeting. The equally bad news is that employment and hours are being cut dramatically,” said Nariman Behravesh, chief US economist at IHS Global Insight. “Unfortunately, many companies will have no choice but to keep cutting jobs and hours.”
The dire employment outlook is compounding troubles in the housing market, whose collapse sparked the downturn. Almost 8 per cent of all US mortgages are delinquent, and 3.3 per cent of loans are in foreclosure.
Copyright The Financial Times Limited 2009
US home loan arrears affect one in nine
By Saskia Scholtes in New York
March 6 2009 00:10
One in every nine US homeowners with a mortgage was behind on home loan payments or in some stage of foreclosure at the end of 2008, as mounting job losses exacerbated the housing crisis, the Mortgage Bankers Association said on Thursday.
The percentage of loans that were in foreclosure or at least one payment past due rose to 11.93 per cent in the fourth quarter, the highest since the MBA began keeping records in 1972 and a jump of almost 2 percentage points since the third quarter.
Jay Brinkmann, chief economist at the MBA, said signs increased that the housing crisis had spread beyond boom-and-bust states such as California and Florida in the fourth quarter.
While such states continued to exhibit the highest levels of late payments, Mr Brinkmann said some of the sharpest increases in mortgage delinquencies were in Louisiana, New York, Georgia, Texas and Mississippi, signs of the spreading impact of the economic downturn.
He said such shifts were likely to continue as unemployment rose. Payment problems are no longer isolated to borrowers with lower credit quality, for example.
While a staggering 23.11 per cent of subprime loans were at least 90 days late on their payments in the fourth quarter, late payments on prime fixed-rate loans, which represent two-thirds of mortgages, are also creeping higher. In the fourth quarter, 3.74 per cent of such loans were at least 90 days behind on their payments.
“We will continue to see a shift away from delinquencies tied to the structure and underwriting quality of the loans to mortgage delinquencies caused by job and income losses,” said Mr Brinkmann.
The new figures come as mortgage lenders and servicers, which collect home loan payments, are gearing up to implement Barack Obama’s housing market rescue plan, the full details of which were released on Thursday.
The $275bn (€219bn, £195bn) plan is aimed at helping struggling borrowers refinance or modify their mortgages by providing a series of market-wide standards for lenders and servicers to implement.
Delays in developing such standardisation have been blamed for a spike in the late payment and foreclosure rate, as some borrowers held out for a “better bail-out” from the government, while some lenders also imposed fourth quarter moratoria on foreclosure proceedings.
One senior executive at a mortgage servicer said his company’s biggest struggle in recent months had been dealing with the number and variety of available mortgage modification programmes.
Copyright The Financial Times Limited 2009
No comments:
Post a Comment