By Juli Morris and Charles Thibault on January 8, 2010 in BLS Nonfarm Employment.

Employment fell by 85,000 in December, according to today's preliminary report from the Bureau of Labor Statistics. This loss was worse than consensus estimates: major stock market indices lost 0.25% in the first two hours of trading today but stabilized after that.

The unemployment rate held at 10.0 percent — consensus estimates had expected it to rise to 10.1 percent.

The economy has shed 7.4 million jobs since the start of the recession in December 2007.

Along with the preliminary report for November, the BLS issued its final estimate of 127,000 job losses for October, a worsening of 16,000 from its revised estimate of -111,000. It revised its November preliminary estimate up 15,000 jobs to report gains of 4,000 jobs, which is the one piece of good news from the report. One more revision for November is in the works.

The "culprits" this month were deviations from trends in the Construction industry and in the "Professional and Business Services" industry. Employment losses in the Government sector also contributed to this month's employment declines.

The table below shows how the Construction industry slipped in December, and how employment in the Professional and Business Services industry also fell below trend:
- ∆ is the change in employment. This is what the BLS usually reports on and what interests stock markets.
- ∆2 is the "second difference" in employment changes. It is the change in the month-over-month change in employment. This measurement is useful in estimating trends because it measures "relative improvements or losses".

So you can see that in the Construction industry, job losses were subsiding at a regular pace : ∆ = -79, -69, -66, -53, -56, -27 until we hit -53 this month, which is a deviation from the improvement trend (positive numbers in the ∆2 column).

And where the Professional and Business Services industry seemed to be gaining steam with job gains of -101, -31, -6, 24, 33, and 89 thousand workers, that industry only added 50 thousand workers this month. That's a relative drop of 39,000 in the trend after several months of consecutive improvements (see ∆2 column there). In other words, we didn't see the "lift" from that industry that we'd been expecting, contributing to overall employment shrinking.

The government sector, which is a little bit more volatile (less smooth ∆2), dropped 21,000 thousand workers which didn't help either.

The Wall Street Journal suggested this morning that bad weather may have been a determining factor in these employment drops. That hypothesis does have a little bit of support given the losses in the Construction industry. The Construction industry is sensitive to harsh weather as construction sites can shut down during storms.

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