As President-elect Barack Obama began to assemble his economic team, the October employment figures released Friday provided a grim reminder of the country’s precarious financial situation, although the stock market seemed to take the news in stride, with gains in early morning trading.
The real blow to the economy came from the manufacturing, construction and services sectors, which drove overall employment down by 240,000 jobs in October, significantly more than consensus estimates that had predicted a loss of 200,000. As a result, the unemployment rate also was worse than expected, rising to 6.5 percent from 6.1 percent in September. Department stores slashed 18,000 jobs last month to employ 1.476 million, while apparel and accessory specialty stores cut 700 positions to employ 1.493 million, the Labor Department reported.
Since January, the economy has slashed 1.2 million jobs, with more than half of those being lost in the last three months. Job losses in October followed a decline of 284,000 jobs in September, revised from an initial estimate of 159,000. The job loss in September was the worst reported since October 2001, directly following the Sept. 11, 2001, terrorist attacks.
Apparel manufacturers cut 4,000 jobs in October. Textile mills that manufacture primarily apparel fabric, cut 1,300 jobs. Textile product mills, which produce industrial and home furnishing textiles, cut 500 jobs.
The downward revisions combined with October losses mean there’s a total of more than 400,000 jobs reported lost that weren’t expected, said Charles McMillion, president and chief economist, MBG Information Services.
“It doesn’t bode well at all,” he said. “in an environment that is already awful across the board, these figures mean retailers are going to need to be even more aggressive heading into the holiday season.
Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland, said, “This is an economy that’s in wholesale meltdown.”
Retail sales, manufacturing levels and the service sector have all taken hits in recent months, he said. Those contractions in the real economy combined with the credit crisis have created a “two-wheeled recession,” he said.
“November job losses are very likely to be worse,” McMillion said. “Recovery programs are urgently needed that are of the scope and scale of New Deal initiatives.”
Stocks rebounded 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 of trading. The index fell a collective 10.8 percent on Wednesday and Thursday as investors turned their attention to economic concerns and away from the presidential election.
The Dow Jones Industrial Average rose 2 percent to 8.870.14 in early trading.
Among the retailers gaining ground were Sears Holding 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., 1.4 percent to $20.21.
For complete coverage, see Monday’s WWD.