Labor market conditions continued to show a significant deterioration in the month of December, with employment falling for the twelfth consecutive month. The unemployment rate for the month also jumped to a sixteen-year high.
A report from the Labor Department released on Friday showed that non-farm payroll employment fell by 524,000 jobs in December following a revised decrease of 584,000 jobs in November. Economists had been expecting employment to decrease by about 500,000 jobs.
The continued decrease in jobs in December contributed to a decrease of 2.6 million jobs for the year, the first net annual job loss since 2001 and the highest annual rate of job losses since 1945.
Additionally, the Labor Department said that the unemployment rate jumped to 7.2 percent in December from a revised 6.8 percent in the previous month. The increase in the unemployment rate exceeded the estimates of economists, who had expected the rate to rise to 7.0 percent.
With the bigger than expected increase, the unemployment rate rose to its highest level since January of 1993.
Peter Boockvar, equity strategist at Miller Tabak noted, "The Augmented Unemployment rate, which includes those that want a job but have stopped looking, rose to 10.4 percent from 9.9 percent."
The Labor Department noted that the job losses in December were large and widespread across most major industry sectors.
Significant weakness was visible in both the goods-producing and service-providing industries, which lost 251,000 jobs and 273,000 jobs, respectively.
The manufacturing industry showed a notable decrease, losing about 149,000 jobs. Employment in the professional and businesses services industry also showed a steep decline, falling by about 113,000 jobs.
At the same time, the education and health services industry added about 45,000 jobs, while the government added 7,000 jobs.
The report also showed that 1.9 million people were marginally attached to the labor force in December, up 564,000 from a year ago. This included 642,000 discouraged workers; workers that are not currently looking for work because they believe no jobs are available.
The Labor Department added that average hourly earnings edged up 0.3 percent or $0.05 in December to $18.36. This followed increases of $0.08 in November and $0.06 in October.
While the decrease in jobs in December was not as steep as some had feared, the continued decrease in employment is likely to add to concerns about the outlook for the economy.
Employment data can have a significant impact on consumer confidence, as people worried about losing their jobs are less likely to make discretionary purchases. This could negatively impact consumer spending, which makes up about two-thirds of economic activity.
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