Friday, November 03, 2006

Slowing Job Creation

The US economy continued its sluggish pace of job creation in October. From this morning's BLS news release:
Employment increased in October, and the unemployment rate declined to 4.4 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Nonfarm payroll employment grew by 92,000 in October following gains of 148,000 in September and 230,000 in August (as revised). In October, job growth continued in several service-providing industries, while employment declined in manufacturing and construction. Average hourly earnings rose by 6 cents over the month.
This is disappointing news, though it was tempered a bit by sizeable upward revisions to the previous two months' employment gains. Nevertheless, the 92,000 net new jobs created in October was substantially below expectations, particularly since only 58,000 were in the private sector (the rest were in government); the expectation for total job creation had been for closer to 130,000. Atrios wins yet again!

At any rate, it still seems that the pace of job creation in the US has cooled a bit in recent months. The picture below shows the 6-month average job creation over the past 10 years.

As many economists have commented about previously, the best job creation of this economic expansion was never nearly as good as during the previous expansion. But even the modest job creation of the past few years seems to be slowing down now.

By the way: if you think that this slowdown in job creation is exclusively the fault of the construction industry, think again. As the following picture shows, nearly every industry in the economy - except for the government - has created fewer jobs over the past 6 months than it did over the previous 6-month period.

The housing sector may be leading the economy toward slower growth. But the rest of the economy seems to be joining in, too.

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