Economy Continues To Hemorrhage Jobs
The September unemployment data released by the Labor Department on Friday shows that it’s not just the financial crisis which is wrong with the economy. The last quarter has seen jobs disappear at an alarming rate, a trend which is expected to continue for some time.
Nonfarm payroll employment declined by 159,000 in September, and the unemployment rate held at 6.1 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and retail trade, while mining and health care continued to add jobs.
The unemployment rate (6.1 percent) was unchanged in September, following a 0.4 percentage point rise in August. The number of unemployed persons was little changed at 9.5 million. Over the past 12 months, the number of unemployed persons has increased by 2.2 million and the unemployment rate has risen by 1.4 percentage points.
Some economists are predicting that the unemployment rate could rise as high as 8% in the next six months. The recent intensifying of the credit crisis will have an adverse effect on the jobs market for some time.
Capital markets are frozen and companies of all shapes and sizes are feeling the pinch. No one is immune to the troubles on Wall Street as we are seeing many firms experiencing cash flow problems.
It is nearly impossible to find credit, banks are looking out for themselves these days, hoarding cash like a miser. The financial rescue package won’t solve liquidity problems overnight, it’s going to take quite a bit of time for the government actions to be felt in the banking system and then the rest of the economy.
In the meantime businesses are going to tighten their belts further and we can expect further contractions in the jobs market across many different sectors as looks increasingly likely that the economy will fall into a recession.
