US employers slash 524,000 more jobs

Bloomberg

The decline in payrolls was in line with forecasts and followed a drop of 584,000 in November, bringing job losses for 2008 to 2.589 million, the most since 1945, according to a Labor Department report Friday in Washington. The jobless rate rose more than forecast to 7.2 percent, a 15-year high, from 6.8 percent.

The outlook for 2009 is no brighter as retailers from Wal-Mart Stores to Macy’s slash profit forecasts and manufacturers including Alcoa cut output and staff.

"We’re seeing pretty ugly numbers as the recession is worsening," Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report. "It’s going to be devastating in terms of consumer confidence and spending. The next couple of months will be dismal."

With Friday’s report, Labor revised figures from its household survey, which includes the unemployment rate, going back five years. Benchmark revisions to the payroll figures will be announced in February.

Last month’s decline was the 12th consecutive drop in payrolls. The economy created 1.1 million jobs in 2007.

Friday’s report showed factory payrolls shrank 149,000, the biggest drop since August 2001, after decreasing 104,000 in November.

The decrease included a loss of 21,400 jobs in auto and parts industries. Manufacturing, which makes up 12 percent of the economy, shrank in December at the fastest pace in 28 years, Institute for Supply Management figures showed.

Payrolls at builders dropped by 101,000 after falling 85,000. Financial firms reduced payrolls by 14,000, after a 28,000 loss the prior month.

Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 273,000 workers after a decline of 402,000. Retail payrolls dropped by 66,600 after a 100,000 decrease. Government payrolls increased by 7,000 after falling 3,000 the prior month.