Unemployment Edges Down With Strong Job Growth

April 6, 2007 (Jobs Byte)

Unemployment Edges Down With Strong Job Growth

Jobs Byte by Dean Baker

For Immediate Release: April 6, 2007

Contact: Lynn Erskine, 202-293-5380 x115

Productivity growth has averaged less than 1.6 percent since 2004.

The establishment survey showed the economy adding 180,000 jobs in March, pushing the unemployment rate down to 4.4 percent. Upward revisions of 30,000 to the prior two months data bring average job growth over the last three months to 152,000.

The job growth was heavily concentrated in the construction (56,000), retail trade (35,900), and education and health sectors (54,000), which together accounted for almost the entire 157,000 increase in private sector employment. The jump in construction employment was a bounce back from a reported loss of 61,000 jobs in February. The January employment numbers were inflated by unusually good weather; construction employment now stands 29,000 above its December level.

Over the last year, construction has managed to add 21,000 jobs as the growth in non-residential construction has more than offset the decline in residential construction. However, the real story is the fact that employment in residential construction is down by only 3.0 percent over the last year, even though construction is down by almost 20 percent. Either productivity in the sector is crashing or, more likely, the data are not reflecting real employment trends. There are many undocumented workers in this sector. It is possible that they did not show up on payrolls during the boom and therefore their lost jobs are not appearing in the data in the downturn.