Jobs Growth Drops to 0.0% in June; Most Sectors in Decline
Alex Carrick
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Seed Newsvine |
Due to the Friday holiday, the U.S. labor market report for June was released on Thursday, July 3 2008, by the Bureau of Labor Statistics within the Department of Labor. It records a sixth straight period of month-to-month job losses. The figure for June (-62,000) was the same as for May and yields a year-to-date total of -438,000 jobs. The year-over-year percentage change in employment has now dropped to 0.0%, after four-and-a-half years of (sometimes quite strong) increases. There is now almost exactly the same number of jobs in the economy as there was 12 months ago.
Perspective: Nearly Three Million Jobs Lost in Last Trough
It is interesting to put the current labor market downturn in perspective. The last extended decline in employment in the United States occurred between March 2001 and August 2003. This was initiated by the “dot.com” collapse in early 2001, followed by the World Trade terrorist attacks in September of that year. The overall economy actually started to pick up again early in 2002. However, employment continued to fall throughout 2002 and into the summer of 2003. The total number of jobs lost during the entire two-and-a-half years was 2.7 million.
There is another interesting way to look at the current labor market situation and the impact that it is having on the economy. Through June of last year, there had been a year-to-date gain in employment of 643,000. Through June of this year, there has been a year-to-date job loss of 438,000. The swing (or net change) has crossed the one million level.
Sub-sectors, Starting with Greatest Losses
The following generally looks at the year-over-year percentage change in employment, from greatest declines to greatest gains. Jobs in construction (-5.9% year over year) have taken the biggest hit. Within construction, employment in residential building is -11.9%; non-residential building is -5.4%; and heavy and civil engineering is -4.8%. Problems in the housing sector are clearly spilling over into other areas of construction activity.
Manufacturing is the second weakest sector for jobs, at -2.5% year over year. Perhaps most alarming within manufacturing is motor vehicles and parts, at -8.2%. The correction in auto demand probably has a ways to go, given what has been happening with gasoline prices and how this is altering demand towards lower-priced and lower-profit-margin cars. Wood products (-8.4%) and furniture and related products (-5.7%) are two other manufacturing sub-sectors where employment prospects have evaporated.
Financial services (-1.2%), information services (-1.0%) and professional and business services (0.0%) have an interesting story to tell for contractors working in the commercial building market. These three categories account for the bulk of office building demand in the country. Their combined employment, year over year, has now turned slightly negative (-0.1%). By the way, professional and business services (17.9 million jobs in June 08) account for a great deal more employment than either financial activities (8.2 million) or information services (3.0 million).
Three Sectors with Job Growth
Only three sub-sectors are showing employment growth above zero percent. Those three categories are: government (+1.2%); leisure and hospitality (+1.9%); and education and health (+2.8%). Leisure and hospitality is an industry where employment growth appears to be easing back. It had been receiving a boost from the long-term decline in value of the U.S. dollar, which was luring foreign tourists to the U.S. However, that effect is now being muted by high fuel prices (both for motor vehicles and airplanes), which is cutting into travel by foreigners and trips by Americans within their own country.
Education and health care are clearly the most desirable career paths at the moment. Furthermore, the health-care area (15.8 million) provides vastly more jobs than the field of education (3.1 million). However, job growth in education (+3.4%) is currently slightly outpacing job growth in health care (+2.7%).
Two Sectors in Worse Shape than in Previous Trough
As a final comment, only two sub-sectors are currently experiencing year-over-year job losses (in percentage terms) that are greater than in the last employment trough. Those two categories – construction and financial services – are also the two categories that were most deeply affected by the sub-prime mortgage fiasco and subsequent liquidity tie-ups.
