From one month to the next, the whole world keeps hoping that the U.S. labor market will improve. It’s not impossible for gross domestic product growth to occur in what is still the world’s largest economy without an increase in jobs, but it is certainly more of a challenge.

Demand for Canadian-built cars and for Chinese consumer goods depends on a U.S. consumer who is more actively involved in shopping. The U.S. home-building market, with spillover effects on the Canadian forestry sector and lumber exports, needs individuals and families feeling more confident about the value of their homes and their abilities to carry mortgage payments. All of these things depend on stronger employment levels in the U.S. economy.

February was one more month of disappointment – and one more month of the “jobless recovery” – according to the U.S. Bureau of Labor Statistics. Between the first and second months of 2010, the net change in employment was -36,000 jobs. While this is an almost insignificant figure, given a total jobs level of 130 million, it is still on the wrong side of ledger.

Having said this, U.S. employment has been essentially flat for the past four months (see graph below). Initial jobless claims confirm this reading, averaging about 470,000 for the past eight weeks. A weekly jobless claim figure of 500,000 marks the point at which new hirings equal new firings. The employment situation has improved and stabilized considerably since a year ago, when the jobs decline was -780,000. January 2009 was the worst month for employment in the recession.

Looking back a little further, U.S. overall employment started to decline towards the end of 2007. The total drop in the number of jobs is now 8.4 million. Two sectors account for more than 50% of the total employment decline – manufacturing at -2.3 million jobs and construction at -2.2 million. Since there are more than twice as many jobs in manufacturing as there are in construction, it is clear that construction has borne the brunt of the pain.

Furthermore, the manufacturing employment decline has leveled off over the past six months, whereas construction employment is still declining. There was a further decline of 64,000 in the number of construction jobs in February. The unemployment rate for construction workers now stands at 27.1% (not seasonally adjusted), the highest by a considerable margin among all industrial sectors. To show the deterioration, the comparable figure in February 2009 was 21.4%.

The good news is that U.S. service-providing employment appears to have bottomed out and is gently edging upward. Its year-over-year change has eased back to -1.6% from a low of -4.0% in the third quarter of last year. The improvement is coming in retail trade, professional and business services, and in leisure and hospitality services. There is only one major sub-sector category at this time with a year-over-year increase in employment and that is education and health. Even government employment (-0.4%) is negative on a year-over-year basis. The U.S. overall unemployment rate stayed steady in the latest month, just under 10.0% at 9.7%.