CBSN

Unemployment Hits 6-Year High

layoff layoffs generic unemployment employment dollar sign
CBS/AP
The nation's unemployment rate took another big leap upward in November to 5.7 percent, the highest level in six years, as 331,000 more Americans lost their jobs, the government reported Friday.

It marked the second consecutive month of massive job losses as the weak economy continued to stagger from the blow delivered by the Sept. 11 terrorist attacks. The October and November job losses were the worst for any two months in more than 20 years -since May and June of 1980.

The government said that since March, when the nation's first recession in a decade began, 1.2 million Americans have lost their jobs.

Economists fear that thousands more will be thrown out of work even if the country is able to mount a sustainable recovery in the first half of next year. Many analysts are forecasting that the jobless rate will peak at 6.5 percent next summer.

The grim employment report wiped away some of the optimism generated in a week that saw the stock market make substantial gains.

"We had a little bit of false euphoria over the past 10 days. This report brings us back to reality," said Carl Tannenbaum, chief economist at ABN Amro of Chicago.

CBSNews.com

The latest from Wall Street
U.S. Stock Markets
Layoffs and Labor
The Federal Reserve
That would still be better than the 7.8 percent unemployment level hit during the last recession in 1990-91.

Service-producing industries that were the engine of the job boom during the record 10-year expansion that ended in March cut jobs for a third straight month in November, letting go 164,000 workers after a huge job loss of 327,000 in October.

The hemorrhaging of factory-sector jobs worsened in November as another 163,000 jobs were cut on top if 124,000 in October.

Employment at hotels fell by 7,000, following an even bigger drop in October, and 25,000 jobs were lost in the amusement and recreation sector. The travel industry has been particularly hard-ht by the terrorist attacks.

One sector that has seen a boom in employment in the last two months is guard services, which added 15,000 jobs in November after gaining 14,000 jobs in October.

The 5.7 percent jobless rate last month, the highest level since August 1995, followed an increase that had pushed the rate to 5.4 percent in October, the first month that layoffs from the terrorist attacks began to show up in the government statistics.

The 331,000 payroll jobs lost last month came on the heels of a loss of drop of 468,000 jobs in October, the biggest one-month loss in 21 years.

While economists still project that the current recession will be over by March, making it about average in length, they are concerned that this forecast could prove too optimistic if the rising layoffs trigger a cutback in consumer spending.

Major retailers reported Thursday that the all-important holiday sales season had gotten off to a lackluster start in November.

The Federal Reserve, which has already cut interest rates 10 times this year in an effort to spur demand for interest-sensitive items such as houses and cars, is expected to cut rates for an 11th time when Fed policy-makers meet Tuesday for their final time this year.

The administration has continued to urge Congress to pass an economic stimulus bill weighted toward tax relief for individuals and corporations, but Democrats have delayed the measure, insisting that more help be included for low-income Americans and people who have lost their jobs.

Factory employment fell by 163,000 last month, bringing the total number of manufacturing jobs lost since July 2000 to 1.2 million. Large cutbacks were made in electrical equipment and industrial machinery, two industries that have accounted for one-third of all jobs lost in manufacturing since the slowdown began.

© MMI, CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press and Reuters Limited contributed to this report