WASHINGTON -- The U.S. recession deepened last month as U.S. companies shed jobs at the fastest rate in more than 30 years, pushing the unemployment rate to its highest level in 15 years.
The figures suggest the year-long U.S. recession may approach or even exceed the 1981-1982 downturn in severity, and support expectations that Federal Reserve officials will soon lower interest rates to levels not seen in a half century.
Nonfarm payrolls, which are calculated by a survey of establishments, plunged a larger-than-expected 533,000 in November, the U.S. Labor Department said Friday, the 11th-straight decline. The economy has lost more than 1.2 million jobs in the last three months alone following revisions to September and October that showed even steeper job cuts than first reported.
The pullback is broad-based, including manufacturing, construction and most service industries. Excluding a small rise in government payrolls, private-sector employment plummeted even further last month. Companies including Mattel Inc., Circuit City Stores Inc., Sun Microsystems Inc. and Citigroup Inc. all announced layoffs last month.
The unemployment rate, which is calculated using a separate survey of households, rose 0.2 percentage point to 6.7%, the highest since October 1993. Economists think the jobless rate, which was just 5% as recently as April, will hit 8% or higher in coming months.
Economists polled by Dow Jones Newswires expected a 350,000 decline in payrolls last month and a 6.8% jobless rate.
By some broader measures, labor-market conditions are even worse. When marginally attached and involuntary part-time workers are included, the rate of unemployed or underemployed workers reached 12.5% last month, up 0.7 percentage point from October.
Average hourly earnings, meanwhile, increased $0.07, or 0.4%, to $18.30. Though a slightly faster gain than expected, that was still up just 3.7% from a year earlier, suggesting the economic downturn is making it harder for workers to demand higher wages, further restraining household spending.
Friday's report further cements Wall Street expectations that Fed officials will lower their key policy rate at the conclusion of their Dec. 15-16 meeting. The fed funds rate already sits at just 1%, matching its 2003-2004 low, and economists expect at least another 0.5 percentage point reduction on Dec. 16.
In a speech Monday, Fed Chairman Ben Bernanke called further rate reductions "certainly feasible." He also hinted at even more dramatic steps including direct purchases by the Fed of longer-dated Treasury and agency securities, which would effectively monetize a portion of the U.S. debt. Calls for that type of action, as well as a massive fiscal stimulus package early next year, should gain steam in light of the employment data.
Indeed, Friday's numbers cap a series of bleak economic reports this week suggesting that after escaping a serious downturn so far, the U.S. faces the type of severe recession that occurred in the early 1980s rather than the relatively mild ones of the early 1990s and 2001. Auto makers and retailers reported dismal sales in November despite efforts to lure consumers with discounts, suggesting households are putting off spending as they face an uncertain economic climate.
Many economists expect U.S. gross domestic product will contract 4% at an annual rate or even more this quarter after falling 0.5% in the third quarter.
According to Friday's report, hiring last month in goods-producing industries fell 163,000. Within this group, manufacturing firms cut 85,000 jobs, with automobile and auto parts makers accounting for 13,000 job losses. Manufacturing losses would have been even larger if not for the return of 27,000 striking aerospace workers last month, the Labor Department said.
Construction employment was down by 82,000.
In a particularly worrying sign, service-sector employment plunged 370,000. Labor-intensive services make up the vast majority of employment and usually cushion downturns. Yet business and professional services companies shed 136,000 jobs -- the 10th drop in 11 months -- and financial-sector payrolls were down 32,000.
Retail trade cut over 91,000 jobs, reflecting the pullback in consumer spending. Leisure and hospitality businesses, meanwhile, shed 76,000 jobs.
Temporary employment, which economists consider a bellwether for future job prospects, fell more than 78,000.
Continuing a recent trend, the main bright spots were in health care and education, which tend to be more labor intensive and less productive than manufacturing and other services. Employment in those sectors rose 52,000.
The government added 7,000 jobs.
The average workweek fell 0.1 hour to 33.5 hours. A separate index of aggregate weekly hours fell one point to 104.7.
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