December employment report:

Nonfarm employment data reveals a loss of 85,000 jobs, the unemployment rate remains unchanged at 10.0% (U-3 data) with the broader measure (U-6) of the employment situation moving back up to 17.3%.

Those unemployed for 27 weeks and over moved up to 6.1 million. That translates to 4 of every 10 unemployed people have been jobless for 27 weeks or longer.

Temporary work showed growth in December of 47,000, however it is important to note that temporary help hiring in December is expected and much of that temporary help is in the retail sectors. This reinforces my statement last week of watching for large declines in the subsequent months as the temporary help is let go.

The jobs data is bad enough, but what is still extremely discouraging is that the average hourly earnings is still flat, coming in at a paltry 0.2 percent rise.

My own forecast remains unchanged for the unemployment rate to reach a minimum of 10.5% by mid 2010.

The initial reaction in the market was a dramatic drop in the futures (S&P), see insert image of futures at time of employment report.Also shown is a chart depicting important levels to watch today on the S&P E-mini’s (/ES).

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