Yesterday, I wrote a story for Reed Construction Data’s Market Insights on the latest U.S. employment numbers, for June 2008. The total year-to-date job loss has been 438,000 and the year-over-year percentage change in employment has fallen to 0.0%.

In this blog entry, let’s take a look at the some of the sub-sectors within the broader job categories. Most of what follows will focus on sectors and industries that have a particular construction connection.

A logical place to start is with employment in construction itself (-5.9% year over year). Within total construction, residential building (-11.9% year-over-year employment) and residential specialty trade contractors (-10.0%) are in sharpest decline. However, non-residential building (-5.4%) is also down, as is heavy and civil engineering construction (-4.8%). But non-residential specialty trade contractors are only slightly negative.

A corollary to the construction numbers is the employment record in real estate services (-1.9%). While this sub-sector has also seen job losses, they have not been to the same negative degree as for residential and non-residential building.

The employment weakness within manufacturing (-2.5%) is concentrated in several product areas with particular ties to construction: wood products (-8.4%); non-metallic mineral products (-4.9%); primary metals (-1.5%); and fabricated metal products (-1.9%).

Job losses are also apparent in several other key manufacturing areas: transportation equipment (-3.8%), which includes motor vehicles and parts (-8.2%); and furniture and related products (-5.7%). I have a concern that the next wave of serious weakness for the economy as a whole, beyond the housing sector, is going to be automotive demand.

The foregoing numbers lead into several sub-categories of retail trade (-1.0%): automobile dealers (-2.1%); furniture and home furnishing stores (-1.7%); electronics and appliance stores (-2.0%); and building material and garden supply stores (-6.0%).

“Transportation and warehousing” ties in to manufacturing and retail activity. In this sub-sector, employment in air transportation has held up surprisingly well, given the increase in price of fuel. Employment in rail transportation (-0.3%) is about on a par with last year. Not so surprisingly, it’s truck transportation (-2.8%) that is feeling the most pain. On previous occasions of rapid fuel cost increases, the railroads have touted their cost advantage (based on lower fuel usage per ton of cargo) versus the long-haul truckers.

Two other employment areas are quite interesting. Within professional and business services (0.0%), architectural and engineering firms (+2.4%) are providing more employment than last year. And finally, within information services (-1.0%), employment in old-line publishing (i.e., excluding the Internet) has weakened (-2.5%) considerably.

Where can one find the most buoyant numbers on U.S. employment? The most readily-apparent strength is in natural resources. For example, employment in oil and gas extraction is +9.6% year over year and in mining, except for oil and gas, it is +1.9%. Coal mining is separated out in the statistics and its year-over-year record with respect to jobs currently stands at a quite respectable +5.2%.

Of course, the irony in this is that the use of coal, whether in power generation or steelmaking, is just about the antithesis of what environmentalists are hoping for. All of the emphasis these days is on being “green”. Whatever its use, and despite considerable advances in carbon capture and cleanup (through the use of scrubbers etc.), coal remains a primary culprit when it comes to carbon emissions.

However, there is an alternative way of looking at this. There still are abundant coal reserves in the world. If further technological breakthroughs really can “clean up” the use of coal by another factor or two, then the addition to usable energy reserves will be enormous. Pilot projects in “clean-burning” coal-fired power generation are in the works in several locations in North America.

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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