Month-to-month U.S. Job Loss was 49,000 in May
The U.S. economy downsized by 49,000 jobs in May 2008, according to today’s report on labor markets released by the U.S. Bureau of Labor Statistics. That brings total job losses for the year to 324,000. At the same time, the unemployment rate has climbed to 5.5%. The last time the jobless rate was that high was in October 2004.

There have been job losses in each of the first five months of 2008. Nevertheless, first- quarter Gross Domestic Product (GDP), in inflation-adjusted terms, grew +0.9% on a quarter-to-quarter annualized basis. The foreign trade sector, mainly through good export sales, is currently carrying the bulk of the load to maintain overall growth. In terms of domestic demand, consumers are being tested by high gasoline prices, falling house prices and uncertain job prospects. (cont'd below)

Construction and Manufacturing Jobs in Decline

The accompanying graphs show the trends of employment levels and changes (year over year) in major sub-sectors. Total employment growth (+0.2%), on a year-over-year basis, has dropped back to almost zero percent. Construction employment (-5.1%) is certainly not helping the cause, with the worst record of all the sectors. This is mainly because housing starts continue to linger in the basement.

Manufacturing (-2.5%) is the second-worst performing category. Manufacturing for export − for example, some categories of large equipment and agricultural products such as fertilizers − is doing okay, but when it is related to housing or automotive demand, the picture is not as rosy. Shakeouts continue in motor vehicle production on account of high world oil prices.

Another sector with declining year-over-year job growth is retail (-1.1%). The problems facing the consumer have already been outlined. However, transportation and warehousing (+0.1%) is still slightly positive. This is somewhat surprising, given that this sector is closely tied to retail trade and manufacturing. Where it is undoubtedly picking up an extra boost is from the shipment of goods meant for foreign trade. This category also includes pipeline shipments, which have been maintained at relatively high levels.

Office-based Employment is Struggling
None of the three office-related categories is providing much spark with respect to job opportunities. Employment in professional and business services (+0.4%) has flat-lined after being strongly positive two and three years ago. Information services employment (-1.1%) is on a slide downward, but this has been an ongoing problem. Financial activities employment (-1.1%) is still negative, but it has bottomed out of late. Hopefully, this is indicative of an end to the financial crisis that started in August of last year.

This leaves three sectors where there is continuing growth in employment: education and health (+3.2%); leisure and hospitality (+2.0%) and government (+1.0%). Big gains in the value of the U.S. dollar over the past several years have presented foreign tourists with a strong incentive to visit the U.S., helping to boost the accommodation industry.

Earnings vs Inflation
The labor report also records that average hourly earnings throughout the U.S. economy have increased +3.5% versus May 2007 and that average weekly earnings have climbed by +3.2%. These levels compare with the latest Consumer Price Index (CPI) increase of +3.9%.

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