Job numbers put hard close on tough economic week

The City Wire economic review for the week of Nov. 3 – Nov. 7:

• The Dow Jones Industrial average closed Friday up 248 points. However, the index ended the week at 8,943, down 4.3 percent from its Monday open of 9,347.

• The unemployment rate rose to a more than 14-year high this week when the government reported that employers slashed around 240,000 jobs in October. So far in 2008, more than 1.2 million jobs have been cut, with 651,000 of those in the past three months. (Click here for detailed information from Talk Business about Arkansas employment figures.)

• The Labor Department said Friday the jobless rate rose four-tenths of a percent to 6.5 percent in October, the highest since March 1994.

• General Motors, the largest American automaker, reported Friday a $4.2 billion quarterly loss. Company officials said they will slash next year’s capital spending budget by $2.5 billion. GM said it went through $6.9 billion in cash.

• Ford Motor Co. reported a $2.98 billion quarterly operating loss Friday. Ford officers said they attempt to cut salary expenses by 10 percent, a move that follows a 15 percent cut earlier this year. Ford said it burned through $7.7 billion in cash to pay costs related to production cuts and make payments to Ford Credit as part of incentive programs to encourage car sales.

• The U.S. economy shrank 0.3 percent in the third quarter, the sharpest contraction in seven years.

• The National Association of Realtors reported Friday that pending sales of existing homes fell in September. The association cited tighter credit rules for the lower number. “The month-to-month weakening in pending home sales is understandable, but because the index remains above year-ago levels it means we’re still in a broad period of stabilization,” said Lawrence Yun, NAR chief economist.

A report from the Kiplinger Business Resource Center included the following observations:
“This is no longer an issue of putting financial markets back in order. We now forecast the unemployment rate reaching 8% by year-end 2009. That’s still nearly three percentage points below the 10.8% peak in 1982 hit in the aftermath of the 1981-82 recession. But in an economy dependent on consumer spending, rising unemployment translates into a much harsher downturn.”

“More than history is signaling tough times ahead. Surveys of purchasing managers for manufacturing and services released early in November point to more layoffs in the near term. Manufacturing has been shedding jobs for more than a year. But, in an ominous note, the purchasing managers said that exports declined in October, and that’s been a rare source of growth this year. The overall manufacturing index is at its lowest since September 1982.”

“One bright spot continues to be job gains in education and health care services. However, the Boeing strike, which ended early in November, subtracted an estimated 27,000 jobs from the payroll total in October.”