Job outlook dims
The unemployment rate isn’t the only job market measure that’s souring. Corporations plan to cut more jobs and there are fewer openings. The number of hours worked, an indicator of future hiring plans, is also weakening. In July, unemployment rose to 5.7 percent from 5.5 percent in June. Global Insight economists expect the rate will climb to 6.1 percent by mid-2009. While the current downturn has not officially been designated a recession, they think it could turn out to be “the mildest on record,” though it will likely be followed by a lagging recovery in the job market.
Fewer hours worked
Based on a preliminary reading, the average work week for private workers in July fell to 33.6 hours from 33.8 a year ago. An index of weekly hours for nonfarm production and non-supervisory workers is slowing from year-ago levels. “A steeper decline in hours-worked is an important warning signal for the outlook,” says JPMorgan economist Bruce Kasman. The metric reflects employers scaling back workers’ hours to cut costs, he says.
Layoffs ahead
This year, through July, newly announced job cuts rose 33 percent to 579,260, and the pace is accelerating, according to outplacement consultant firm Challenger, Gray & Christmas Inc. The financial sector and airlines are scaling back the most, but weakness is spreading to other sectors, the firm says. Recently announced layoffs have yet to be reflected in unemployment data.
Opportunities dry up
The Department of Labor says the rate of job openings, measured on the last business day of a month, compared with available jobs, has ticked down in recent months. Typically it's stable. “Given the sharp rise in unemployment, it would appear that net job losses are being driven more by a lack of opportunities for new entrants into the labor force rather than by large job losses for existing workers,” write RDQ Economics’ John Ryding and Conrad DeQuadros.
