February Jobs Report Shows Six of Ten Sectors in Pain
Alex Carrick
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Seed Newsvine |
In February 2008, the U.S. had its second straight period of month-to-month job decline (-63,000), according to the latest release from the U.S. Bureau of Labor Statistics. This was after more than four years of nothing but increases. Furthermore, the year-over-year performance of job growth has been trending down since early 2006 when the figure was over +2.0%. The latest year-over-year increase in total employment is +0.6%.
If the U.S. is not in a recession, it is as close as anyone wants to come. (As a further observation, it is hard not to be in a recession when housing starts decline nearly 60% from their peak, and financial markets disgorge bad news with alarming regularity.) There is a good reason (other than the long-term consequences for inflation) that the Federal Reserve has just cut interest rates again (to 2.25% for the federal funds rate, down from 5.25% last August)
Four Sectors Shedding Jobs
The accompanying graphs show employment numbers in ten major sectors and sub-sectors (not counting “total” and “services total”). Four of the groupings are showing year-over-year employment declines: construction (-2.9%); manufacturing (-2.1%); financial activities (-1.4%) and information services (-0.7%). Construction has had the widest swing of the four, having dropped from a year-over-year gain of nearly +8.0% at the height of the residential construction boom in January 2006.
Financial services, currently being hammered by the liquidity crisis, has also seen marked decline, down from +3.0% job growth in early 2006. Manufacturing has had a checkered history and the low negative number now is actually an improvement versus 2001 through 2003. Information services has also come back a long way from the steeper declines that were being recorded after the dot.com collapse in 2001.
Two Sectors Standing Even
Two other related sectors have just about the same number of jobs now as a year ago − retail trade (0.0%) and transportation and warehousing (+0.2%). This is one demonstration of weakness developing in consumer spending.
Four Sectors Performing Relatively Better
This leaves four sectors that are performing relatively better than the others. These are areas of employment that are benefiting from one of three factors − somewhat recession-proof activity in the private sector; government spending in the public sector; and the several-year drop in value of the U.S. dollar.
Professional and business services employment is still positive (+1.3%), although down from a high of +4.0%. Accounting and legal work is needed almost as much as ever at this time of crisis in the financial sector and architectural activity remains strong tied to good levels of non-residential building work. Leisure and hospitality employment, holding steady at +2.5%, is traditionally a late-cycle bloomer that is also doing well as a result of foreign visitors taking advantage of the low-valued U.S. dollar. Education and health employment (+3.0% year over year) and government employment (+1.1%) just keep chugging along, the former due to the demographics of an aging population and the latter due to the past several years of strong tax revenues.
