US job losses hit record in 2008
The US jobless rate rose to 7.2% in December, the highest in 16 years.
Companies are cutting jobs as consumers reduce spending, amid fears the world’s biggest economy will be in recession for a long time.
US President-elect Barack Obama said that the situation is dire and action is urgently needed to help the economy.
“Clearly the situation is dire. It is deteriorating and it demands urgent and immediate action,” he told a news conference.
He added that he was making good progress on in talks with Congress on a new stimulus package – estimated to cost $800bn (£526bn).
Shares fell on the news of the job losses, with the Dow Jones Industrial Average down 124.8 points at 8617.66 points and the S&P 500 down 16.5 at 893.25.
Oil prices slipped more than $1 a barrel to below $41 a barrel. The rise in unemployment raised fears of slackening demand for oil.
Jobs blow
The annual jobless total was higher than expected, partly because jobless figures in November and October were revised upwards.
November’s job losses were revised to 584,000 from 533,000 while October’s losses were revised to 423,000 from 320,000.
More than half of the job losses last year were in the last four months of the year.
Analysts had forecast that 550,000 jobs would go in December.
Most December job losses were in the service sector, which shed 273,000 jobs. Manufacturing jobs fell by 149,000 in December, while employment in construction fell by 101,000, with retailers cutting staff by 67,000.
Some of those lucky enough not to lose their jobs, had their hours reduced. The number of aggregate hours worked in December fell 0.2 hours to 33.3 hours, the lowest level since records began in 1964.
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WHERE THE JOBS WERE LOST
Factories: 791,000
Retail: 522,000
Temporary work: 490,000
Construction: 630,000
2008 figures from US Labor Department
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“The drop in average hours worked in this employment report suggests that the first quarter is going to be very, very weak,” said Cary Leahey, economist at Decision Economics.
The number of people who worked part time – because their hours had been cut back or because they were unable to get full-time work – increased by 3.4 million to 8 million in the last 12 months.
AT&T, the telecoms giant, was among those to announce job cuts last month, reducing its workforce by 4% and cutting 12,000 positions.
‘Ugly and getting uglier’
Anthony Conroy, head trader at Bny Convergex, said: “Well, the numbers look better than I think many were anticipating. I had heard anywhere from 500,000 to about a million, so it’s definitely better than anticipated.”
Other analysts found little consolation in the figures.
“No matter how you look at it, these are dismal numbers,” said Matt Esteve, foreign exchange trader at Tempus Consulting.
Added Richard Yamarone, chief economist of Argus Research: “The job situation is ugly and is going to get uglier. There’s no reason to expect hiring anytime in the next three to six months. We are not going to see any hiring until the government steps in and acts.”