(Corrects 12th paragraph to say Fed cut interest rates last
month by 1 percentage point; not this month)
* U.S. employment falls more than expected in October
* August, September job losses deeper than first thought
* Jobless rate highest in more than 14 years
* Analysts say data suggest possibility of deep recession
By Glenn Somerville
WASHINGTON, Nov 7 U.S. employers slashed an
unexpectedly steep 240,000 jobs from payrolls last month and
the jobless rate shot up to a 14-1/2-year high, the government
said on Friday in a report underscoring the economy's steep
The Labor Department also said job losses in September and
August were deeper than previously thought. The economy shed
284,000 jobs in September, the most since November 2001 which
was shortly after the Sept. 11, 2001 attacks on the United
States, and lost 127,000 in August. That meant 179,000 more
jobs were cut in August and September than previously thought.
So far this year 1.2 million jobs have been lost, 651,000
in the past three months alone, showing labor markets are
crumbling faster and heightening chances of a deep recession.
"We have entered the phase of serious recession conditions.
Unfortunately we will encounter more of this ...," said Richard
DeKaser, chief economist for National City Corp in Cleveland.
Analysts said the bleak data could give further impetus to
efforts on Capitol Hill to quickly craft a package of measures
to help support the economy. President-elect Barack Obama was
set to huddle with top economic advisers later in the day
before holding his first news conference since being elected.
Wall Street economists had expected a loss of 200,000
nonfarm jobs in October and had looked for the jobless rate to
move up to 6.3 percent from 6.1 percent in September.
Instead, the unemployment rate rose a steep four-tenths of
a percent to 6.5 percent, the highest since March 1994.
"The 6.5 percent unemployment rate will only reinforce
market talk of a peak in the unemployment rate above 8
percent," said Alan Ruskin, chief international strategist at
RBS Greenwich Capital in Greenwich, Connecticut.
Still, the data was not as dire as some had feared.
While the dollar EUR= extended losses, U.S. stocks .DJI
rose and prices for U.S. Treasuries US10YT=RR turned lower.
"I think people were basically looking for a pretty weak
number so it needed to be a tremendous surprise," said Thomas
di Galoma, head of U.S. Treasury trading at Jefferies & Co. "It
needed to be down 350,000 to really get the market rolling."
The U.S. Federal Reserve has cut benchmark interest rates
by 4.25 percentage points over the last 13 months, including 1
point last month alone, in an effort to buffer the economy from
a deep housing slump and a widening credit crisis which has
Interest-rate futures prices imply a 64-percent perceived
chance the Fed will lower its target overnight federal funds
rate to 0.5 percent at its next policy meeting in December.
That would be the lowest on records dating to July 1954.
In manufacturing alone, a whopping 90,000 jobs were cut in
October -- reflecting in part 27,000 striking workers at Boeing
Co. That followed a loss of 56,000 factory jobs in September.
Service-producing industries cut 108,000 jobs in October on
top of 201,000 lost in September.
Earlier this year, job losses had been concentrated in the
factory sector, but September marked the third month in a row
that the vast services sector lost more jobs than
manufacturing, a sign of the economy's widening woes.
Construction industries dropped 49,000 more jobs last month
after eliminating 35,000 in September, many of them in
specialty trades related to home building.
Average weekly hours of work held steady at 33.6 in
October. At factories, the average workweek also held steady at
40.6 hours, while overtime was unchanged at 3.6 hours.
But the big drop in employment pulled down a measure of
overall work effort by 0.3 percent.
(Additional reporting by Ros Krasny in Chicago and Burton
Frierson in New York; Editing by James Dalgleish)