Monday, July 12, 2010

Private sector job growth lags

Well there is more trouble in the labor market as private sector job growth stays below 100K. On Friday, July 2nd, 2010, the Bureau of Labor Statistics report private hiring increased by only 83,000, which is well below the 125K-150K need to reduce the unemployment rate.

Non farm payrolls actual decreased 125,000 person as 225,000 temporary employee finished US census jobs.

In detailed job news, manufacturing added 9000 jobs and construction contracted by 22,000 jobs. Two other signals of a tough labor environment were also reported: The average work week declined 0.1 hours and average wages dropped $0.02.

Two pictures(below) tell the story of Non Farm Payrolls during the recession and in the longer term. Here is the recession graph. You can see, for the first time, private service employment contracted. Add in the huge loss in goods producing jobs and you get 10% unemployment

Here is a chart of non farm payroll from Jan 1981 to June 2010. You can see the manufacturing jobs have slowly decreased. But service employment doubled! The growth was completely due to private sector services. Government employment remained between 16% and 18% for the entire period. During the 40 year period the economy grew by more than 2% per year. Yet manufacturing employment decreased.

So, you really have to ask what happened to those manufacturing jobs during the past 40 years.

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