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Nonfarm payroll employment declined 533k, making November one of the worst months for the labor market in post-war US history. Estimates for total payrolls for the previous two months were revised down a total of 199k jobs. Discouragingly, September was revised down to a decline of 403k from 284k previously, suggesting the labor market was already contracting rapidly before the most acute phase of the crisis in financial markets began. Average weekly hours also declined to a record low of 33.5 hours (the series has a downward secular trend), which, in terms of total hours worked in the economy, is equivalent to an additional payroll decline of about 300k. Aggregate hours over the past three months have declined at an annualized rate of 5.1%, and aggregate hours for Q4 are tracking -6.1% q/q ar. A key factor behind the decline in hours reflects a sharp increase in the number of workers on part-time schedules due to economic reasons. This share of the labor force who said they were working part-time due to weak business conditions jumped to an all-time high of 3.5%, the previous peak being 3.4% in 1983. In a nutshell, there has been a significant increase in “underemployment” beyond the increase in unemployment.

Most sectors of the economy shed jobs during the month, with the contraction in service-providing employment more than doubling. Total service sector payrolls declined 370k, business services 136k, leisure and hospitality 76k, and retail trade 91k. Education and health services employment continued to increase, rising 52k. Goods-producing employment fell 163k, with declines of 85k in manufacturing and 82k in construction.

The unemployment rate increased less than expected, to 6.7% (6.682% unrounded), as a sharp pullback in labor force participation diluted the heavy job losses. The total labor force declined 422k (household employment declined 673k) as the participation rate slipped to 65.8% from 66.1%. Elsewhere, average hourly earnings remained surprisingly high at 0.4% m/m or 3.7% y/y. Given the slack emerging in the labor market, analysts do not believe these above-trend readings will persist.