The unemployment rate jumped to 6.5% in October, a 14-year-high, as the economy lost another 240,000 nonfarm payroll jobs last month, the Labor Department reported Friday morning.
Total job losses for the first 10 months of 2008 have reached 1.2 million, following losses of 284,000 in September, and 127,000 in August. Most of the losses have come in manufacturing, construction, and some service-providing industries, while health care and mining continue to add jobs.
The number of unemployed people has increased 2.8 million in the last 12 months, while the unemployment rate has shot up by 1.7 percentage points over the same period.
The big take-away for builders, says Christian Weller, a senior fellow at the Center for American Progress and a professor at the University of Massachusetts in Boston, is that as more jobs are lost, the more demand for houses will erode.
“Demand will be hurt as job losses accelerate,” Weller told BUILDER in an e-mail. “That is probably the most important message (for builders), that the labor market contraction is big and has accelerated in the past two months.”
Among the hardest-hit industries during the economic downturn, construction lost 49,000 more jobs in October. Since hitting a peak in September 2006, construction employment has lost 663,000 jobs, largely in residential construction.
Construction is not alone in fueling unemployment growth; the financial sector has lost 200,000 jobs since its peak in December 2006. In October, employment in financial services fell by another 24,000 jobs.
Long-term unemployment, which measures the number of workers who are jobless for 27 weeks or more, increased by 249,000, to 2.3 million in October. The average time spent unemployed is also increasing, up to 10.6 weeks from 10.2 weeks in September. Newly unemployed people, who are jobless for fewer than five weeks, increased by 212,000 to 3.1 million people last month.
Even for those who still have jobs, the situation is getting worse. The number of people who are forced to work part-time for economic reasons, but would like to work full-time, rose 645,000 to 6.7 million people during October. In the last 12 months, the number of involuntary part-time workers increased by 2.3 million.
And Weller points out that wages are not keeping pace with inflation. In September 2008, hourly earnings were 1.9% below those in September 2007, and 0.7% below September 2006 levels, he said.
“In October, hourly wages rose by less than one percent on an annual basis before inflation is accounted for,” Weller said in a report also released Friday on job losses. (He shared the report with BUILDER.) “This is likely not enough to keep pace with inflation.”
All these factors are weighing on job-hunters, whose confidence in the economy may be flagging. The number of discouraged workers, which are people who have given up looking for a new job because they do not believe any jobs exist for them, is now at 484,000 people, which is an increase of 164,000 compared to the same time last year.
Ethan Butterfield is senior editor, business, at BUILDER magazine.