The unemployment rate rose from 8.5% in March to 8.9% in April, the highest level in 26 years and matching the consensus estimate.  Nonfarm payrolls fell by more than 500,000 for the sixth-straight month as companies shed 539,000 jobs, a little less than forecast but the prior two months were revised modestly higher.  The economy has now shed 5.7 million jobs since the recession began in December 2007.

Losses were widespread and were masked by a 72,000 increase in government positions as it gears up for the 2010 census. Another bright spot came in the form of 15,000 new opportunities in education and health services. But the news remained bleak for workers employed in the service sector, construction, and the nation’s factories.

Weekly jobless claims released yesterday fell to the lowest in over three months, signaling that the worst in the job market may be past, and April’s loss was the smallest since October.  Although the trend is finally moving in the right direction, the number of unemployed remains uncomfortably high and the recent improvement in weekly claims came a little late for the April jobs report. Please see Jobless claims on downward path.

An historical look

The data provided below by the Bureau of Labor Statistics reflect the percentage decline in the number of jobs from the peak of employment. By looking at the three steepest recessions over the past 35 years, the chart shows that the current contraction is the worst, resulting in a 4.2% loss in the number of jobs since the top of the employment cycle in December 1997. We are now just shy of the percentage drop in payrolls seen in the 1958 recession.

In contrast, nonfarm payrolls fell just over 3% in the 1982 recession and 2.8% in the recession of 1974, when the economy was racked by double-digit inflation and an oil embargo.

You can see that the drop in employment this time around was modest until the credit freeze in September severely jolted the economy, forcing firms to quickly slash payrolls amid falling demand for goods and services. The 1974 recession saw sharp losses after the first three month, followed by a recovery, while layoffs in 1982 were fairly steady until a bottom was reached.

I'll take a look at how employment has recovered following recessions next week.

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