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US job losses steepest since 1974

Chris Giles in London and Joanna Chung in New York | December 08, 2008

US companies suffered the biggest job losses in more than 30 years last month, underscoring the depth of a recession that is spreading rapidly from financial centres to most parts of the global economy.

Non-farm payrolls were cut by 533,000 in November - far worse than most economists expected. The bleak labour department report capped a week of poor data from advanced economies and a string of emergency rate cuts in Europe.

In depth:
The state of the US economy [MULTIMEDIA]

The choices that confront America

"This is almost indescribably terrible," said Ian Shepherdson, chief US economist at High Frequency Economics. "In the past six months, the US has lost 1.55m jobs, almost as many as were lost in the whole 2001 recession."

Earlier, the US Mortgage Bankers' Association reported that a record number of borrowers fell behind on their payments in the third quarter. Almost 7 per cent of mortgage loans were in arrears, while a further 2.97 per cent were at some stage of the foreclosure process.

With the outlook deteriorating by the day, indicators from the Organisation for Economic Co-operation and Development showed a "strong slowdown" in every leading economy and all emerging economies apart from Brazil.

The Bundesbank forecast the German economy would contract by 0.8 per cent in 2009 after new industrial orders fell 6.1 per cent in October. Orders were 17.3 per cent down on a year ago.

The deteriorating outlook has driven down demand for crude oil, sending oil prices tumbling. Last week, the price of oil fell by more than at any time since the start of the Gulf War in 1991. In late afternoon trade, West Texas Intermediate crude for January delivery was $41.12, down more than 5 per cent on the day and 24 per cent for the week.

President George W Bush and Barack Obama, the president-elect, agreed the jobs figures reflected the effects of the US recession. It was the first time Mr Bush acknowledged the US had slipped into recession. Earlier this week, the National Bureau of Economic Research declared the recession started a year ago.

Mr Obama said there were "no quick or easy fixes" to the crisis, which "has been many years in the making". He said it was likely "to get worse before it gets better".

Michael Woolfolk, senior currency strategist at the Bank of New York Mellon, predicted that US unemployment would top 8 per cent next year.

In New York, the S&P 500 fell by as much as 3.2 per cent during early trading before rallying to close about 4 per cent higher.

Earlier in the day, fears that the US jobs figures reflected a persistent global malaise rocked European equities. The FTSE Eurofirst 300 index lost 4.16 per cent, while in London the FTSE 100 index fell 2.74 per cent. Asian markets were closed by the time the figures were published.

Copyright The Financial Times Limited 2008


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