The press did a good job covering the December employment report. The drop in payrolls was shy of November's downward revision and far better than our fears after Wednesday's estimate from ADP -- the payroll check writers (See the Jan 7 post).
2008 payroll losses were the largest since 1945 as the trends show no evidence of near term improvement. The -355K average decline over the last six months compare with -464K over the last four months and -554K over the last two. Over 3/4s of the recession's declines have come in just the last four months.
The breakdown shows declines in all major components outside of health and government. The chart below compares the payroll movement over the first quarter of 2008 to the final quarter of the year. The weaker growth seen in all the components shows the sharp contraction in Q4 service employment (e.g. retail, business) as well as the weak goods producing segments (e.g. construction, manufacturing) already falling off soundly in the first quarter.
Even the slowly changing workweek length showed evidence of worsening ahead as it fell to the lowest since the government began tracking the figure in 1964. Reduced hours is typically foretelling a labor downsizing.
Talk now centers on Obama's fiscal stimulus and just how quickly it will turn the tide in the economy. Opinions differ. My 2009 outlook includes some of the details.
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