Economy Loses Jobs for the First Time in Four Years

September 7, 2007 (Jobs Byte)

Economy Loses Jobs for the First Time in Four Years

Jobs Byte by Heather Boushey

For Immediate Release: September 7, 2007
Contact: Alan Barber, (202) 293-5380 x115 

The one bright spot in today’s report is that average hourly wages grew at an annual nominal rate of 4.5 percent over the past quarter, putting wage growth slightly above inflation.

The economy lost 4,000 jobs last month and prior months’ job gains were revised downwards, raising the possibility that the economy may be at a turning point. Employment grew by only 68,000 in July and 69,000 in June, a downward revision of 81,000 jobs relative to initial estimates. The Bureau of Labor Statistics (BLS) uses a statistical model to predict how many new firms are established and how many go out of business each month, but when the economy turns from expansion to contraction, these models tend to overstate the number of new business and understate firms closing, which is what appears to be happening now.

The report shows that the crisis in the housing sector is fanning out to the rest of the economy. Employment losses were concentrated in manufacturing, construction, temporary help, and local-government education, while job growth continued in health care and food services. Construction, manufacturing and temporary help have all been showing job losses for some time, but the job losses are over twice the typical monthly losses that these industries have seen over the past year.

Construction lost 22,000 jobs in August, with most of the jobs lost in residential specialty trade contractors, which fell 18,000 last month. Over the past year, construction has lost 90,000 jobs and the job declines in August were nearly three times as large as the monthly average. Manufacturing employment dropped 46,000 in August, a much larger dip than in prior months. Over the past year, manufacturing has lost 215,000 jobs, with losses spread across industries within manufacturing..