Wednesday, December 03, 2008

Worse Than Anticipated

There are some eye-opening tidbits in the latest private sector jobs report:

NEW YORK ( -- The U.S. economy shed a quarter-million private-sector jobs in November, according to a payroll processor's report that was worse than economists expected.

Non-farm private employment fell by 250,000 jobs from the previous month on a seasonally adjusted basis, according to the ADP National Employment Report.

The report was expected to show a decline of 200,000 jobs in November, according to a consensus of economist projections compiled by

The goods-producing sector lost 158,000 jobs last month, its 24th consecutive month of decline, according to the report. This includes 118,000 positions in manufacturing and 44,000 construction jobs.

The service industry shed 92,000 jobs, its second month of losses since the ADP reports began tracking employment in 2002.  

So you can see, this recession has been a long time coming and very slow to develop, like a really really bad flu. And it will take a long time to work its way through the system.
It's very unusual for a jobs report to be 25% understated from predictions, in either direction. These folks usually have a pretty good idea what's going on in the marketplace. My suspicion is a lot of business-owners just tossed the keys on the bank manager's desk and said, "Here, you deal with this."
It's not a whole lot different walking away from a business than it is walking away from a house, to be sure.
Note too that for seven years, the service sector has added jobs every month except one (have to look that up), until last month. And keep in mind that this is just ahead of the Christmas season, when retailers normally hire both temps and permanent workers. The fourth quarter is when retailers justify their 2009 budgets.
This report differs from the "official" jobs report, because it ignores government jobs. When Bush expanded the Department of Homeland Security, in effect, he created a mask for the really horrendous employment numbers of the manufacturing sector of private industry, banking heavily on the snapshot reporting of not only the network news organizations, but of the business channels as well.
After all, when was the last time you heard Brian or Katie or Charlie say anything more than "The jobs report came out today and the unemployment rate is..."?
Possibly someone on CNBC (forget FOX Business News) will invite a contrarian on to discuss the numbers who will point out that private sector hiring is lagging. Maybe. And that's usually in the middle of the day when everyone is watching the ticker.
So when someone tells you this recession is a product of the subprime meltdown and the credit crisis, keep this article in mind. This thing has been a long time coming and is developing very slowly, and will take a long time to work its way thru the belly of the beast.