Jobless Rate at 3-Year High : Economists Cry Recession at 5.9% Figure

The worst two-month stretch of layoffs since the 1981-82 recession pushed civilian unemployment to a three-year high of 5.9% in November, the government said today.

In California, the jobless rate rose to 6.7% from 6% in October.

Nationally, payrolls fell by 267,000 last month, the Labor Department said, after 180,000 jobs were lost in October. Since June, when the unemployment rate was 5.2%, nearly 1 million Americans have joined the ranks of the unemployed.

Practically all of the nation’s industries have been affected.

“This report looks like a recession. It walks like a recession. . . . It is a recession,” said Allen Sinai, chief economist at Boston Co. “And it’s full-fledged, accelerating and widespread.”

Added Robert Brusca of Nikko Securities Co.:

“This recession looks about as bad as any recession can look. . . . It deepened in November; the pace has accelerated.”

November’s 5.9% jobless rate was the highest since unemployment was 6% in October, 1987. Many analysts predict unemployment could hit 7% next year.

“The negative momentum is not yet spent. . . . We are in the heart of the downturn now. There is no turning back. It cannot be reversed. The question is how deep and how long will it last?” Sinai said.

“We have a vicious cycle going here,” Brusca said. “The more people you lay off, the less they’re going to buy, the less businesses can produce, the more people they lay off.”

Today’s unemployment report, the government’s first data on economic activity for November, should add to pressure on the Federal Reserve Board to cut interest rates to stimulate the economy, Brusca said.

With 7.3 million Americans looking for work but unable to find it, November’s losses hit hardest in the manufacturing sector, which has been sliding downhill for months. Factory payrolls declined by 200,000, the biggest one-month drop since 1982.

The automobile industry alone lost 55,000 jobs, reflecting temporary shutdowns to avoid excessive inventory buildups.

Construction lost 62,000 jobs as the housing market continued to deteriorate. Over the last six months, that industry has seen jobs tumble by about 250,000.

The service-producing sector, which until a few months ago had been enjoying healthy job gains and keeping the economy steaming ahead, showed widespread weakness too.

Retail trade lost 70,000 jobs because general merchandise stores are falling short on their normal seasonal hirings.

Health services continued to boom, adding 80,000 jobs. Over the last year, that industry has added more than 600,000 jobs.

Labor costs, frequently blamed for intensifying the nation’s inflation problems, rose only slightly in November. The average hourly worker made $10.13 an hour last month, up one cent from October.

Overall, total civilian employment was about 117.3 million in November, down about 450,000 from October.

RATE CUT: Several banks lowered their main lending rate. Pg. 3