MW: Worst job losses in almost three decades expected
Manufacturing, services activity also headed lower, forecasts say
WASHINGTON (MarketWatch) -- The gainfully employed have good reason to give thanks this holiday season.
More than one million jobs have been lost this year through October, according to the Labor Department. And the upcoming November employment report is expected to show a loss of another 350,000 jobs, according to analysts surveyed by MarketWatch. A decrease of 350,000 would be the largest drop since May 1980, when more than 400,000 jobs were shed.
Economists are basing their gloomy forecasts in part on the uncomfortably high levels of first-time filings for state unemployment insurance benefits. These weekly initial jobless claims have vaulted over the half-million mark -- up more than 50% from last year -- and are way above a level of about 300,000 to 325,000 that is seen as consistent with healthy job growth.
Economists at IHS Global Insight have a particular gloomy outlook for nonfarm payrolls, and are looking for a "huge" decline of 370,000, despite a boost of about 27,000 from Boeing workers returning from strikes.
"Unemployment insurance claims have climbed rapidly as businesses are shedding labor, and hiring is anemic," Global Insight analysts wrote in a research note. "Retail employment is likely to fall very sharply since the usual seasonal uptick in hiring will be muted -- translating into a steep seasonally adjusted decline."
In October, payrolls fell 240,000. If the monthly employment report due Friday does show a drop of 350,000, then total jobs lost for the four months ended in November will reach more than one million.
"Weakness should be broad based across most industries given the high degree of caution and the need for employers to manage costs aggressively in this recessionary environment," wrote analysts with Credit Suisse.
Analysts surveyed by MarketWatch are looking for the November unemployment rate to jump to 6.8% from 6.5% in October. A rate of 6.8% would be the highest since 1993.
Manufacturing, services contractions likely
On Monday the Institute for Supply Management will report on manufacturing activity for November and analysts are expecting a fourth consecutive month of contraction. With the financial crisis taking its toll, the ISM reported that manufacturing activity in October reached its lowest level since 1982.
"With financial turmoil spreading internationally, the likelihood of a recovery in the manufacturing sector is slim," wrote Bank of America analysts in a research note.
For October, ISM reported that its overall index hit 38.9%. Readings above 50% indicate an expansion of the manufacturing economy, while readings below indicate a contraction. Analysts polled by MarketWatch are looking for a November result of 36.5%.
On Wednesday, ISM will report its nonmanufacturing index, and analysts are looking for a decline there as well. For October, the nonmanufacturing index swung to a contraction with a result of 44.4. Analysts polled by MarketWatch expect this index to dip to 42.9 in November.
"Retail sales have dropped considerably in recent months and the labor market has deteriorated further," according to Barclays Capital analysts. "We forecast the weakening economy will take an increasingly significant toll on the service sector."
