November 10, 2008 – In Friday’s data, U.S. payroll employment fell by 240K in October after a revised September decline of 284K. For the three months through October, payrolls fell at an average rate of 217K per month.
Payrolls fell by 0.8% in October, compared to the same month last year (Chart 1).
In both of the last two recessions, this twelve-month trend continued to slow to a decline of about 1.5%. In both cases, that low point came a few months after the recession ended.
The unemployment rate shot up by 0.4 percentage points in October to 6.5% (Chart 2). That’s 1.7 percentage points above the Congressional Budget Office’s 4.8% estimate of its full-employment level.
By this gauge, the economy hasn’t been this far from full employment since January 1993.
In addition to this rising unemployment, more and more of the employed have been forced to cope with downsized jobs.
In October, 4.6% of the employed said they were working part time for economic reasons, even though they would have preferred to work full time (Chart 3). That’s up from 4.2% in September and 3% in October last year.
These involuntary part-timers haven’t made up such a large part of the work force since December 1993. (Back then, they accounted for 5.2% of the employed.)
Bottom line: October’s job losses will be working to keep real consumption growth (and real GDP growth) weak.