Nonfarm payroll employment declined by 159,000 in September, and the unemployment rate held at 6.1 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and retail trade, while mining and health care continued to add jobs.
With the exception of education and health care and government employees, every other job sector was down. If we take out this months total birth/death model adjustments we get a total job loss of 201,000 (yes, the birth/death model is still adding jobs to the total number of jobs created).
This report represents an acceleration of the trend we have been seeing -- job losses are getting worse. We see that in the new jobless claims:
The number of U.S. workers filing new claims for jobless benefits rose to their highest in seven years due to the impact of hurricanes Ike and Gustav, the government said in a report on Thursday.
The number of initial jobless claims was 497,000 in the week ended September 27, the highest since 517,000 in the week ended September 29, 2001 and above Wall Street economists' forecasts of 475,000.
"It is estimated that the effects of Hurricane Gustav in Louisiana and the effects of Hurricane Ike in Texas added approximately 45,000 claims to the total," the Labor Department said in its weekly report.
While the numbers from the hurricanes may seem to be distorting the totals, this chart from Calculated Risk says otherwise (click on the chart for a larger image):
As a result of the weak employment situation car sales are tanking:
Toyota, Chrysler, Ford and Nissan Motor Co. reported U.S. sales declines of more than 30% for the month compared with September 2007, while Honda Motor Co. and General Motors Corp. showed sharp downturns as well.
Overall, the industry sold only 964,873 vehicles -- a 26.6% slide from a year earlier and its biggest percentage drop in 17 years, Autodata Corp. said Wednesday.
Industry executives blamed public unwillingness to make purchases amid the nation's financial troubles, as well as a lack of credit from lenders.
"It's tantamount, really, to a natural disaster," said George Pipas, chief sales analyst at Ford. Showroom traffic, he added, was at levels associated with "a large storm or the aftermath of 9/11."
According to CNW Marketing Research, visits to auto dealerships in the last 10 days of September declined 51% compared with the same period last year, the largest slide in at least 22 years.
Toyota's U.S. sales last month were down 32.3% from the year-earlier period, while Ford declined 33.7%, Nissan slipped 36.8% and Honda fell 24%. Since January, Toyota's sales are down 10.4%, while Ford's have fallen 17.1%. Maserati and Bentley were the only makers to post gains in September.
Until last month, Honda had been one of the few carmakers to show a net gain on the year, but declines in August and September have now sucked it down to an overall 1.1% downturn through the first three quarters. Truck- and SUV-heavy Chrysler saw a 32.8% decline for the period, and is off 25% on the year.
GM had a relatively modest 15.5% decline, provoking a near celebratory response from the nation's largest automaker.
While I would blame the credit crunch for some of this, I also think there is a huge drop in consumer confidence right now. With an important election a little more than a month away, constant negative economic news and a financial system that is literally in a meltdown there is no inventive to purchase a car (or any other durable good) right now.
Also note this is an across the board hit. The Japanese and US makers are dropping equally. It's not a change of preference from one brand to another. Instead it's a complete boycott.
On Wednesday we learned that the US manufacturing sector is not doing very well:
The nation's manufacturing firms were contracting at a much faster pace than expected in September, one of the clearest signs to date that the economy has entered recession territory, according to a closely watched survey of top executives released Wednesday.
The Institute for Supply Management index fell to 43.5% from 49.9% in August, much lower than the 49.6% expected by economists surveyed by MarketWatch. See Economic Calendar.
This marked the sharpest one-month drop in the index since 1984. The index is now at its lowest level since October 2001. Read full survey.
Prior to September, the ISM has been treading water, hovering around 50. This seen as a signal the economy was muddling along. But now economists said there is little chance that months of negative growth can be avoided.
This shouldn't be surprising either. Not only is domestic demand dropping, but Europe and Asia are also slowing down. Therefore the export story is going away.
And finally, confirming the obvious slowdown in purchases is the drop in consumer spending is this report of, well, consumer spending from Monday:
Hard-pressed U.S. consumers curbed their spending during August despite an unexpected jump in incomes, according to a government report on Monday that implied worry about the economy's direction was deepening.
The Commerce Department said consumer spending was flat in August after barely edging up by a revised 0.1 percent in July, a much weaker outcome than forecast by Wall Street economists surveyed by Reuters who had a 0.2 percent spending rise.
Incomes from wages and salaries and all other sources rose by 0.5 percent in August, largely reversing July's revised 0.6 percent drop and well ahead of forecasts for a smaller 0.2 percent gain. Incomes had been boosted early in the year by payments made under an economic stimulus program but that has largely worn off.
So -- people are spending less as evidenced in the macro spending numbers and auto sales numbers. The reason is the continued weakness in the job markets. And it's only going to get worse.