US employment report shows recessionary impact of housing and credit crisis

Employment in the goods-producing sector fell by 33,000, including a 24,000 drop in construction and a decline of 11,000 in manufacturing. Construction jobs fell in November for the fifth consecutive month, reflecting the virtual collapse in home building. A new report released Thursday by Moody’s Economy.com called the current housing slump “the worst downturn since 1945.”

Employment in the financial services industry also fell, by 20,000, a result of mounting layoffs by banks and other financial institutions that have been forced to write off billions of dollars in subprime mortgage-linked assets.

Employment rose by 127,000 in service-providing businesses, including education and health services, retail trade and professional services. Government employment also increased.

The jobs figures were slightly higher than Wall Street projections. The general reaction on the New Stock Exchange was relief that the figure was not sufficiently dire to suggest an imminent plunge into full-scale recession, and not so strong as to dissuade the Federal Reserve Board from announcing its third successive interest rate cut when its policy-making committee meets next Tuesday.