Today’s January employment report was nothing short of wretched. To date, this labor cycle has cost 3.6 million workers their jobs, roughly 2.5% of the labor force.
Industry slashed 598,000 jobs in aggregate, spread broadly across the dismal goods-producing sector, -319,000, and the plummeting service sector. -279,000. The unemployment rate surged a greater-than-expected 0.4% to 7.6%, with the household survey reporting 508,000 newly unemployed workers, and the number of workers leaving the labor force is mounting.
The job loss is spreading like a virus and digging deeper into each industry. Here are some of the highlights from the payroll report:
- Construction slashed 111,000 jobs, where 67,200 of those were specialty trade contractors.
- Durable goods sent 157,000 more workers home, with transportation equipment being the single largest layoff, -40,900.
- Services cut 48,000 fewer jobs than in December, but still sent 279,000 workers home.
- Transportation and warehousing (air, rail, water, truck, etc.) lost 43,700 jobs, roughly 1% of that workforce.
- Securities, commodity contracts, and investments cut 15,100 jobs, or 1.8% of its workforce.
- Temporary help services fell another 76,400, or 3.7%. These workers are unlikely to have benefits when they are fired.
- The last man standing in the private sector is education and healthcare, which added 54,000 jobs.
It is becoming abundantly clear that firms are clinging to productivity by cutting costs (marginal costs) left and right. In fact, yesterday’s Q4 productivity numbers confirm the abundance of firings: productivity surged 3.2% when output fell 5.5% because the number of hours worked fell by more, 8.4%.
This was truly a surprise. The total claims filed in this survey period was smaller than the previous period, and the ADP report suggested something along the lines of 507,000. This labor cycle is really, really bad.