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TMCNet: Unemployment spikes: State jobless rate at 7.1%, worse than analysts expected

[January 24, 2009]

Unemployment spikes: State jobless rate at 7.1%, worse than analysts expected

(New Haven Register (New Haven, CT) Via Acquire Media NewsEdge) Jan. 24--Connecticut shed 29,300 jobs last year -- 11,500 in December alone -- and the unemployment rate spiked to 7.1 percent last month as the state grapples with a severe recession that is battering the job market, labor officials reported Friday.

"There's no way you can sugarcoat this. This is very, very bad news -- worse than we were expecting," Peter Gioia, vice president and economist at the Connecticut Business and Industry Association.

In addition to bleak December figures, the state's November job loss total was upwardly revised to 9,800, according to the state Department of Labor.

"We were bracing for a large decline (in December) because that's what was happening nationally," said Nicholas Perna, economic adviser to Webster Financial Corp. "I don't think any of us was expecting that number. That's really big."

The latest data incorporates recent changes to the way the department estimates employment figures. Due to those changes, officials said November and December 2008 data is "not totally comparable to the previous months' data."

But area economists, surprised by the surge in cuts, said there is an undeniable trend of accelerating job losses.

"We clearly have the downturn in the state intensifying," said Donald Klepper-Smith, chief economist at DataCore Partners LLC in New Haven. "The national recession is taking full hold here."

Job cuts gained momentum throughout 2008, with most cuts coming within the last quarter of 2008, according to state labor economist John Tirinzonie. Of the 29,300 jobs eliminated last year, 25,000 or 86 percent were lost in the fourth quarter.

"The last three months have been terrible," Gioia said, and layoffs have continued into the new year.

Connecticut could lose up to 80,000 jobs by the time the recession ends, he said.

Nonfarm employment in the state was 1,677,200 last month, with the greatest loss coming in the trade, transportation and utilities sector. Those industries lost 4,500 jobs, due mostly to cuts in the retail sub-sector.

Some of the other areas that lost jobs in December were construction, down 1,900; leisure and hospitality, also down 1,900; and professional and business services, down 1,500.

Education and health services was the only sector that grew last month, adding 100 jobs.

With the national recession deepening, the state's job losses are expected to continue, Klepper-Smith said, as employers are reducing the number of hours employees work, which typically is a precursor to job cuts.

Connecticut's unemployment rate jumped 0.5 percent last month, to 7.1 percent from 6.6 percent in November. A year earlier, in December 2007, the unemployment rate was 5 percent.

The national unemployment rate in December was 7.2 percent.

The state's unemployment rate last month was the highest since September 1992, according to Klepper-Smith, who said it is poised to top 9 percent.

The state's unemployment rate and job figures are derived from two separate surveys. The unemployment rate is based on a survey of households while employment figures are derived from a survey of employers.

Meanwhile, the labor force -- those working or looking for work -- shrank by 8,800 from November to December. December's labor force total of 1,894,700, however, remained 12,500 greater than in December 2007.

In addition to the pain such bad news causes for those who are laid off, job losses deflate consumer confidence and take a toll on the state by reducing income tax and sales tax collections as people have less income and reduce their spending, Perna said.

"These numbers have a lot of implications flowing from them," he said, adding that several factors are needed for an economic recovery to begin, including some resiliency in the stock market and a narrowing decline in home prices. "We still haven't seen anything like that."

To see more of New Haven Register, or to subscribe to the newspaper, go to http://www.nhregister.com.

Copyright (c) 2009, New Haven Register, Conn.
Distributed by McClatchy-Tribune Information Services.
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