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U.S. employment gain in December confirms tendency towards improvement01/10/2012 by Alex Carrick
In December, 200,000 net new jobs were created in the United States, according to the Bureau of Labor Statistics. The unemployment rate declined slightly from 8.6% the month before to 8.5%.
A monthly gain of 200,000 jobs is a strong performance. The figure has been higher in only five other months since the end of the recession.
The biggest jump in employment post-recession came in May, 2010, at +458,000.
There has been a positive change in employment in the U.S. for the past 15 months in a row.
The cumulative increase over that period has been 2.1 million jobs, with +1.6 million coming in 2011.
Between previous peak employment in January 2008 and the trough in February 2010, the total number of positions contracted by over eight million.
Since early 2010, 2.7 million jobs have been reclaimed. That still leaves a shortfall of more than six million.
While there are still plenty of naysayers about the U.S. jobs market, there was a marked tendency towards improvement throughout last year.
No longer are year-over-year employment percentage changes mostly negative.
The overall increase in U.S. employment in December 2011 was +1.3%. That’s a figure that has gradually improved since a low of -5.0% in both July and August of 2009.
The highest the percentage change climbed prior to the recession was +2.0%.
In a best case scenario, with year-over-year employment growth moving up from +1.3% to +2.0% by the end of this year, the result would be an additional 220,000 jobs per month.
Adopting a slightly more conservative estimate, say +200,000 per month, the six-million-jobs shortfall would still take another two and a half years (i.e., 30 months) to replace.
But on the plus side, almost every major sub-category of employment in the U.S. is now recording a year-over-year positive percentage change.
Leaders among the sub-sectors in December were professional and business services (+2.7%), education and health (+2.2%), leisure and hospitality (+2.0%), manufacturing (+1.9%), retail (+1.7%), transportation and warehousing (+1.6%) and construction (+0.8%).
Those categories cover a wide range of activities and there will be more to say about their underlying trends in a moment.
But first, what about the categories that were flat or negative? There were three primary ones: financial services (+0.1%), information services (-1.3%) and government (also -1.3%).
While the recession had real world consequences for goods production and the delivery of services, it began in the financial sector and affected credit availability and debt ratings as primary fallouts.
Hence, the lingering after-effects for the financial sector, where surviving banks have been forced to restructure and economize, and for governments – the largest borrowers in the country – where deficits are playing havoc with credit ratings.
When budgets come up short, a first step is to lower costs. That often means reducing staff.
It’s interesting to note that within financial services, employment in real estate, rental and leasing is up slightly. This is consistent with a housing sector, both new and resale, that has bottomed out and appears to be trending slightly upward.
There are six other sub-categories that provide information on broader-sweeping changes, one each in manufacturing and leisure/hospitality and four in professional services.
Employment in the motor vehicle sector (+7.4% year over year) is important for what it says about manufacturing overall, which has largely been on a roll for the last couple of years.
Within the professional and business services category, employment in accounting and bookkeeping services (+7.0%) and computer systems design services (+4.1%) are doing best.
Total employment in the former category is almost back to where it was before the recession and in the latter, it’s 5.4% higher than at its previous peak in August 2008.
The employment level in computer systems design services is one of the few to have set a new all-time high since the recession.
Architectural and engineering services employment (+2.1%) is ahead on a year-over-year basis, but remains 10% below its previous peak of February 2008.
Two lagging categories are legal services, which has flattened out at a level 5% below its previous peak in May 2007, and gambling and recreation, where employment continues to slide.
Are there job categories that might be described as hot right now?
While it’s a category that’s relatively minor in the big scheme of things, employment in oil and gas extraction in December was 15.6% higher on a year-over-year basis.
No wonder there are so many news stories, with accompanying worker profiles, about some of the new energy-focused boom regions in the country, such as North Dakota.
The jobs are being created along with investments in tight oil and shale natural gas plays.
Foreign investors, from China, France and Japan to name just a few, are increasingly getting in on the action.
Employment in mining other than oil and gas is also doing alright, +4.6% year over year.