As President-elect Barack Obama began to assemble his economic team, the October employment figures released Friday provided a grim reminder of the country’sprecarious financial situation, although the stock market seemed to take the news in stride, with gains in early morning trading.
The real blow to theeconomy came from the manufacturing, construction and services sectors, whichdrove overall employment down by 240,000 jobs in October, significantly morethan consensus estimates that had predicted a loss of 200,000. As a result, theunemployment rate also was worse than expected, rising to 6.5 percent from 6.1percent in September. Department stores slashed 18,000 jobs last month to employ1.476 million, while apparel and accessory specialty stores cut 700 positions toemploy 1.493 million, the Labor Department reported.
Since January, theeconomy has slashed 1.2 million jobs, with more than half of those being lost inthe last three months. Job losses in October followed a decline of 284,000 jobsin September, revised from an initial estimate of 159,000. The job loss inSeptember was the worst reported since October 2001, directly following theSept. 11, 2001, terrorist attacks.
Apparel manufacturers cut 4,000 jobs in October.Textile mills that manufacture primarily apparel fabric, cut 1,300 jobs. Textileproduct mills, which produce industrial and home furnishing textiles, cut 500jobs. The downward revisions combined with October losses mean there’s atotal of more than 400,000 jobs reported lost that weren’t expected, saidCharles McMillion, president and chief economist, MBG InformationServices.
“It doesn’t bode well at all,” he said. “in an environment that isalready awful across the board, these figures mean retailers are going to needto be even more aggressive heading into the holiday season. Peter Morici, aprofessor at the Robert H. Smith School of Business at the University ofMaryland, said, “This is an economy that’s in wholesale meltdown.”
Retailsales, manufacturing levels and the service sector have all taken hits in recentmonths, he said. Those contractions in the real economy combined with the creditcrisis have created a “two-wheeled recession,” he said.
“November job lossesare very likely to be worse,” McMillion said. “Recovery programs are urgentlyneeded that are of the scope and scale of New Deal initiatives.”
Stocksrebounded Friday morning despite the bleak job picture.
The Standard &Poor’s Retail Index inched up 1.1 percent to 270.64 in the first 45 minutes oftrading. The index fell a collective 10.8 percent on Wednesday and Thursday asinvestors turned their attention to economic concerns and away from thepresidential election.
The Dow Jones Industrial Average rose 2 percent to8.870.14 in early trading.
Among the retailers gaining ground were SearsHolding Corp, up 4.1 percent to $52.68; Charming Shoppes Inc., 3.1 percent to$1.33; AnnTaylor Stores Corp., 2.6 percent to $9.16; Gap Inc., 2.4 percent to$12.76; Macy’s Inc., 1.9 percent to $10.64, and Target Corp., 0.5 percent to$35.64.
Vendors picking up steam included Warnaco Group Inc., up 8 percent to$19.22; VF Corp., 2.5 percent to $52.74; and Phillips Van Heusen Corp., 1.4percent to $20.21.