The US economy lost more than half a million jobs in December for the second month running, figures showed on Friday, making 2008 the worst year for job losses since 1945 and intensifying pressure on Congress to pass a fiscal stimulus.
The number of jobs lost during the year reached 2.6m, while the unemployment rate – 4.4 per cent before the credit crisis – jumped to 7.2 per cent in December, its highest level in 16 years.
Unemployment has risen by a full percentage point since September, when the crisis intensified with the collapse of Lehman Brothers. There was also a further rise in the number of discouraged workers no longer actively seeking employment.
President-elect Barack Obama seized on the report – which he said showed the situation in the jobs market was “dire” and “deteriorating” – to urge swift passage of his proposed near-$800bn fiscal stimulus.
“This morning we received a stark reminder of how urgently action is needed,” he said. “For the sake of our economy and our people, this is the time to act without delay.”
There were signs the political pendulum – which had swung away from swift passage of a fiscal stimulus on this week’s $1,200bn deficit warning by the Congressional Budget Office – was swinging back after the report.
Boeing, the US aircraft maker, added to the gloom on Friday, announcing that it would cut 4,500 workers in its commercial aircraft unit this year, about 7 per cent of the unit total, as the company looks to slash costs in the global economic recession, which has already taken its toll on aircraft orders. Shares fell 24 cents, or 0.5 percent, to $44.54 on the NYSE.
The loss of 524,000 jobs in December was less than feared by some analysts, but investors focused on the report’s grim details, sending the S&P 500 down 1.6 per cent at midday.
The average work week fell to 33.3 hours, the lowest level since this number was first estimated in 1964, while the number of temporary workers fell. Both numbers suggested further large job losses are likely.
Job losses were more concentrated in manufacturing and construction than in November, although that could reflect incomplete adjustment for seasonal factors. The US manufacturing sector lost 791,000 jobs in 2008, while the retail trade lost 522,000.
Germany, the UK, France and Spain all reported industrial output had slumped in November, with some year-on-year falls running into double digits. The Financial Times Limited