(By Mayur Pahilajani - iStockAnalyst Writer)

Washington, D.C. - The U.S. economy further sank deep into the quicksand of recession as an official report by the government showed that nonfarm payrolls declined more than expected in November, while the U.S. unemployment rate also jumped last month.

The Labor Department released its November jobs report on Friday showing the unemployment rate surged at the fastest pace in 15 years to 6.7 percent from 6.5 percent in October as more number of companies fired more employees last month.

According to the report, as many as 533,000 individuals lost their jobs in November for a eleventh-straight month, which is at the fastest pace in 34 years, following a sharp decline of 320,000 in October. Job losses were large and widespread across the major industry sectors in November.

The market analysts on Wall Street had expected the report to show a drop in payrolls by 350,000 and the unemployment rate to rise by 6.8 percent in November.

Last month, analysts at Goldman Sachs Group Inc. (NYSE: GS) said that the recession is likely to deepen as unemployment rate in the U.S. may jump to 9 percent in the fourth quarter of 2009 as labor market further deteriorates and financial conditions tightens.

After-tax corporate earnings are expected to drop by 25 percent, which would be lowest since the Depression. With the latest announcements in the job cuts across all the major sectors, the unemployment rate is expected to rise further as the economy experiences longest slowdown since the last recession.

Payroll cuts were revised up to 199,000 in the month of September and October. From the month of September, the U.S. economy has reported jobs loss of over 1.2 million, with an average of around 419,000 per month, compared to the monthly average of job cuts of 82,000 earlier in the year.

The report showed that since the start of the recession in December 2007, which was recently announced by the National Bureau of Economic Research, the number of unemployed persons increased by 2.7 million, and the unemployment rate rose by 1.7 percentage points.  

Companies in construction, manufacturing and several service-providing industries continue to cut jobs as they aggressively streamline and restructure their operations for better quarterly earnings, gain confidence among investors and shareholders, and deal with the slowdown in growth.

The rate of employment continued to rise mainly in the sectors such as education and health care.

Over the last eleven months, the U.S. economy lost 1.9 million jobs as the companies cope with deepening financial subprime mortgage-related crisis and slumping credit market condition.

The Department said the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.2 million in November, which constituted major part of the payroll cuts.

The number of unemployed persons increased by 822,000 over the past 12 months. Last year, the economy created as much as 91,000 new jobs each month on average.

Friday's report showed rise in average hourly earnings by $0.07, or 0.4 percent, to $18.30 on seasonally adjusted basis. The average hourly pay is up by 3.7 percent over the past 12 months ending November. Last month, the average workweek dropped by 0.1 hour to 33.5 hours.

Construction sector shed 82,000 jobs due to weak housing market, manufacturing jobs went down by 85,000, which is a lower number in the automobile industry as the workers returned to work and ended 52-day long strike at Boeing.

Other areas that registered job cuts include business and professional services by 136,000 positions, mostly temp help jobs; retailers by 91,000 jobs, mainly due to lowered consumer spending.

Despite facing tough financial phase, the financial services sector decided to cut only a few numbers of payrolls compared to other sectors, down by 32,000 jobs. Leisure and hospitality businesses cut by as many as 76,000 jobs.

On the positive side, the report showed that health-care and education both adding 52,000 jobs. Government added 7,000 jobs.


Source: http://www.bls.gov/news.release/empsit.nr0.htm