Friday, May 8, 2009
This is what the labor market looks like to me:
The April employment report was nothing short of awful. The unemployment rate surged four-tenths of a percent to 8.9%, and the nonfarm payroll was reported to have shed another 539k jobs. In total, the unemployment rate almost doubled and the payroll slashed 5.7 million jobs since the cyclical peak, December 2007.
The chart below illustrates the payroll loss by sector for the big 3 recessions – those that lasted 16 months or more (April marked the 16th month of recession in the current cycle).
- In the big 3, the current cycle is seeing record job in construction, manufacturing, trade, transportation and utilities, financial activities, professional and business services, leisure and hospitality, and other services.
- The “last men standing” in this cycle – those industries that added jobs over the cycle – span just three industries mining and logging (<1% of the total payroll), education and health services, and government. Government is a risk, as the bulk of states and local governments are seeing budget shortfalls.
- May 2009 is the 17th recession month in the current cycle, making it the longest recession since 1933. There is much job loss left in the pipeline; and although labor market is not expected to emulate that of the Great Depression, it does seem steal the spotlight from the 73-75 and 81-82 recessions.