The private sector lost 250,000 jobs in November, the largest decline in six years. -- PHOTO: AGENCE FRANCE-PRESSE
WASHINGTON - THE US labour market shed jobs at a breakneck pace in November amid deteriorating economic conditions, surveys showed on Wednesday, signalling the world's largest economy is diving into the depths of recession.
In an ominous sign for the holiday shopping season, the private sector lost 250,000 jobs last month, the largest decline in six years, according to the ADP National Employment Report.
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US private employers cut 250,000 jobs in November, an unexpectedly large number and the biggest in seven years, while the service sector, which powers most of the economy, posted its worst slump on record.
Wednesday's reports were the latest signs that the slide in the US job market is nowhere near bottom and suggested Friday's government payrolls report could exceed current expectations for 320,000 job losses in November.
Separately, labour consultancy Challenger, Gray & Christmas said layoffs announced by employers in November rose to 181,671 as job cuts for the year officially surpassed one million for the first time since 2005.
The grim job figures highlighted weakening economic activity across the United States over the past several weeks.
Most economic sectors faced pressure, the Federal Reserve said in its Beige Book report on Wednesday to be used by Fed policymakers for their Dec 15-16 meeting on interest rates, The unemployment data also came ahead of the Labour Department's release of its weekly jobless claims report on Thursday and overall employment data on Friday, which according to analysts could show 325,000 jobs lost in November and the jobless rate rising to 6.8 per cent from 6.5 per cent in October.
'The layoff announcements data corroborate other employment-related indicators in suggesting that labour market conditions have deteriorated significantly in the fourth quarter,' said Mr John Ryding of RDQ Economics.
The ADP report said nonfarm private employment decreased 250,000 from October to November on a seasonally adjusted basis, the decline exceeding analysts' consensus forecast of a 200,000 drop.
ADP revised upward the October jobs loss to 179,000 from a prior estimate of 157,000, following a September decline of 26,000.
The report 'cast a worrisome shadow over the more comprehensive employment report that comes out Friday', said Mr Patrick O'Hare, analyst at Briefing.com.
The job loss in November was again driven by the goods-producing sector, which posted its 24th consecutive monthly decline, the ADP report said.
But unemployment also fell sharply in the services sector, with 92,000 jobs shed in November, the first two-month consecutive loss in six years in the critical sector that employs more than three-quarters of the workforce.
Service sector activity also fell to the lowest level in November in at least a decade.
The Institute for Supply Management, a trade group of purchasing executives, said its non-manufacturing index fell to 37.3 per cent in November, down from 44.4 per cent in October, the lowest reading since the survey began in 1997.
The Challenger report said November represented the largest job-cut month since employers announced a record 248,475 planned layoffs in January 2002, when the economy was still struggling from the Sept 11, 2001, terrorist attacks.
'It is too soon to tell if and when government intervention will be effective at stemming the rate of job cuts,' said the consultancy's chief executive John Challenger.
Employers have now announced 1,057,645 job cuts in 2008, just shy of the 1,072,054 layoffs announced in 2005, which was the last time that annual job cuts surpassed 1,000,000, the Challenger report said.
The most notable job-cut event in November was banking giant Citigroup's plan to reduce its payroll by more than 50,000 employees.
President-elect Barack Obama has announced plans to create 2.5 million new jobs as he forged ahead in his bid to shore up the flagging economy before his Jan 20 inauguration.
The Federal Reserve has warned the jobless rate could climb to 7.6 per cent in 2009.
A private panel of US economists charged with the official designation of business cycles said this week it had determined the world's largest economy has been in recession since December 2007. -- AFP
