December 7, 2007 (Jobs Byte)
Job Growth Slows In November
The annual rate of wage growth over the quarter was just 2.9 percent.
The establishment survey showed the economy adding just 94,000 jobs in November, somewhat less than had been expected. This number is made somewhat worse by the fact that job growth was revised down by 49,000 for the prior two months. Job growth has averaged 100,000 a month since July, with private sector growth averaging just 66,000.
Construction and manufacturing continue to be drags on total employment, losing 24,000 and 11,000 jobs, respectively. The job loss in construction is concentrated in the residential sector, but employment in non-residential building has been edging downward since March, suggesting that the boom in this sector may be coming to an end. The reported job loss in the residential sector is growing, but employment is still down less than 4 percent from peak levels, a clear understatement of the impact of the housing slump. Manufacturing employment is down by 183,000 from its year ago level, a fall of 1.3 percent. The sectors that have been hit hardest by this job loss have been textile mills (10.8%), apparel (8.9%), and autos (5.9%).
The financial services sector lost 20,000 jobs in November, reflecting the slowdown in housing. The credit intermediation sector has now lost 58,200 jobs since July, 2.0 percent of total employment.
The professional and technical services category added 23,900 jobs in November, continuing a trend of extraordinary growth. This narrow sector, which includes areas like computer consulting, architecture, legal services, and accounting, has accounted for 24.2 percent of the job growth over the last year even though it accounted for only 6.5 percent of employment in 2006.
The other big job gainer in November was the leisure and hospitality sector, which reported 26,000 new jobs, 16,900 of which were in restaurants. Restaurant employment was revised down by 25,000 through October. This is not a surprise since the rapid job growth previously reported seemed inconsistent with Census data showing little growth in restaurant sales.
Analysts may be deceived by the 8 percent growth in the average hourly wage reported for November. The wage data for September and October were revised downward in this report so that annual rate of wage growth over the last quarter has been just 2.9 percent. This is down sharply from a 3.8 percent rate of wage growth over the last year.
While the establishment data suggested a weak economic picture, the household data provides a more ambiguous outlook. Employment jumped by 696,000 in November, raising the employment to population ratio (EPOP) by 0.3 percentage points. The increase was primarily among men, who saw their EPOP rise by 0.5 pp. However, the EPOP for men is still down by 0.2 pp from its year ago level. By age group, the surge in employment was concentrated among older workers. Workers over age 55, and workers between the ages of 45 and 55, each accounted for 33.2 percent of the growth in November employment. Workers over age 55 account for 87.6 of the employment growth over the last year, with employment declining for workers between the ages of 35 and 44 and teens.
Other data in the household survey are not consistent with surging employment. The number of workers involuntarily working part-time rose, as did the share of long-term unemployment. Also the percentage of unemployment attributable to people voluntarily leaving their job remained at the lowest level since October of 2004, suggesting that workers are reluctant to give up a job until they have lined up another one. It seems more likely that the reported jump in November employment was due to the erratic nature of the household data than any real surge in jobs.
The overall picture in this report is of a weakening economy. With the downward revisions to prior months’ job growth, the establishment survey is showing very weak private sector job growth. The household survey had been showing declining EPOPs until this month, which is consistent with other signs of weakness in this month’s survey. The slowdown in wage growth is also consistent with a weakening labor market. With rapidly declining house prices slowing both housing and consumption, the immediate future does not look bright.
Dean Baker is the Co-director of the Center for Economic and Policy Research.
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