Friday, May 04, 2007

April Employment Report

This morning the BLS released new employment estimates for April. The average forecast was for net nonfarm job creation of about 100,000. It turns out that that forecast was a tad optimistic, but not too far off:
Nonfarm payroll employment edged up (+88,000) in April, and the unemployment rate was essentially unchanged at 4.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job gains continued in several service-providing industries, including health care and food services, while employment declined in retail trade and manufacturing.
Here is a picture that shows a few key measures of the health of the overall labor market, including net new jobs and the hours per week each worker is being asked to work.

Job growth has been sluggish for several months now, and hours worked per week has shown little sign of increased labor demand.

But one of the most interesting questions for me regarding the labor market right now is the degree to which sectors of the US economy other than housing are starting to soften. To get at this question, I've put together the following picture, which shows employment growth in several of the biggest sectors of the economy (other than the government).

It's still a bit early to definitively declare that we now have clear trends (other than that construction and manufacturing employment continue to be weak - surprise surprise)... but it's certainly starting to look a bit like some of the other sectors of the economy - particularly professional and business (p&b) services and leisure/hospitality (l&h), and perhaps even retail trade - may be softening a bit.

Note that p&b services and l&h services are two of the largest sectors of employment in the economy, accounting for almost half of all private-sector job growth over the past two years. Yet recently, job creation in those sectors has fallen to levels not seen since this recovery took hold in 2003 (with the exception of the bite that Katrina took out of l&h employment in late 2005).

Early signs of contagion? Could be.

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