The April 2008 U.S. employment numbers were released on Friday (May 2) by the Bureau of Labor Statistics. It is really no surprise that the latest numbers do not line up well versus the two key benchmark measures as set out at the bottom of this report.

Results: For the fourth straight month, there was a decline in the total number of jobs, although it was only a small drop. Non-farm payroll employment fell by 20,000 in the latest month. This is actually not that bad news. However, the total number of jobs lost so far this year has been a little over one-quarter of a million. The unemployment rate improved to 5.0% in April from the March level of 5.1%.

The employment numbers correspond with what we already know about soft spots in the U.S. economy. For example, construction employment was -5.0% on a year-over-year basis in April. The only surprise there was that the figure wasn’t even lower.

Housing starts are down about 60% from their peak level and residential investment in the national accounts has been in double-digit decline (often in excess of -20%), on a quarter-to-quarter annualized basis, for seven quarters now. Furthermore, investment in non-residential structures (-6.2%) was also down in the first quarter, according to the latest Gross Domestic Product (GDP) report.

Manufacturing employment continues to struggle, despite better access to foreign markets as a result of U.S. dollar declines over the past several years. Domestic demand for goods is under strain as consumers wrestle with high gasoline prices, falling home prices and worries about their jobs. In the first-quarter GDP report, “real” (i.e., inflation-adjusted) consumer spending on durables (-6.1% quarter to quarter annualized) was quite weak, mainly due to a flagging auto sector. Real spending on non-durable goods (-1.3%) was only mildly negative. It was spending on services (+3.4%) that kept the economy afloat.

Where the lower-valued U.S. dollar has come in handy has been in attracting foreign tourists. Leisure and hospitality employment (+2.4%) was up solidly on a year-over-year basis. With one notable exception (see next paragraph), the other sub-categories of employment turned in lacklustre performances on the jobs front, ranging between +1.0% and -1.0% year over year.

Finally, if stability is what you are seeking beyond all else in your working life, then look to the two sub-categories that are institutional in nature. Job growth in education and health care (+3.0%) was the leader among all categories, while government employment (+1.0%) continued to advance at a plodding, but determined, pace.

By the way, the number of jobs in health care far exceeds the number of jobs in educational services. As for government employment, there are far more workers at the local level than in state or federal government employment.

See related Market Insights story, with trend graphs.

Two Key Benchmark Measures: There are two benchmark figures to target with respect to U.S. employment: (1) +1.2% year-over-year job growth; and (2) +140,000 as the long-term average increase in the month-to-month number of jobs. As long as these targets are being approached or exceeded, it is hard to say too much negative about the U.S. labor market. If the latest figures fall short, the economy may still be okay as long as some other key indicators are positive. However, if the latest figures fall short and there are other indications of slowdown, then warning signs start to flash about overall weakness in the economy. Job growth leads to income growth, which drives consumer spending (70% of U.S. Gross Domestic Product).

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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