The nation’s economy is performing well and its prospects through 2018 remain good. On August 4th, the Bureau of Labor Statistics (BLS) reported that 209,000 new jobs were created in July. This brings the total number of seasonally adjusted (SA), non-farm people employed in the US in July to 146.615 million (M), +0.14% month on month, (m/m). Over the past 12 months the US economy has added 2.191M jobs for an average of 182,600 per month. This represents a +1.52% year on year, (y/y) increase.
The SA goods producing sector employed 20.036M people in July, up 22,000, (+0.11%), m/m and by 394,000 (2.08%), y/y. The SA service providing sector employed 126.579M people in July, up 187,000 jobs (0.15%), m/m and 1,782,000 (1.43%), y/y. Thus 86.3% of US jobs were in the service sector, 13.7% in good producing as of July 2017. As a point of reference, twenty years earlier in July 1997, 80.6% of US jobs were in the service sector and 19.4% were in the good producing sector. Forty years ago the split was 72.1% to 27.9%.
Figure 1 shows manufacturing jobs from 1980 to present. After a long downhill spiral manufacturing employment has begun to make comeback commencing in late-2009. The SA manufacturing sector employed 12.425M in July, up 16,000 (+0.15%), m/m and an increase of 134,000 (1.09%), y/y. The two largest employment categories within manufacturing are motor vehicles and parts and transportation equipment. There were 944,500 employed in the manufacture of motor vehicles and parts, up 2,000 m/m, (0.17%) and higher by 13,000, (1.36%) y/y. The transportation equipment field employed 1,620,900. Jobs in this sector were up by 4,000, (0.23%) m/m and up 5,000, (0.30%) y/y.
The construction sector employment a total of 6.899M, up 6,000 (0.09%), m/m and up by 228,000 (3.73%), y/y. Most construction workers are employed constructing buildings. In July there were 1.529M workers constructing buildings, up 6,000, (0.36%) m/m and an increase of 68,000, (4.62%) y/y. Heavy civil engineering was the next largest construction segment employing 973,400 in July, down 1,000, (-0.12%) m/m but up by 37,000, (3.98%) y/y.
Highway, streets and bridge construction, industrial building construction and commercial building construction jobs lag one month. In June these three sectors employed 372,600, (+18,000, 5.08% m/m), 169,700, (+1,000, 0.65% m/m) and 610,000, (+15,000, 2.54% m/m) workers respectfully,
Figure 2, shows US construction and manufacturing jobs on the same chart from 2005 to present. After the great recession ended manufacturing jobs were created at a faster pace than construction jobs. The situation reversed at the beginning of 2015. Since then construction have continued to increase at approximately the same rate, while manufacturing jobs have increased at a much slower rate.
Government is a very large employer, greater than the entire goods producing sector with 22.358M total employed, up 4,000, (0.02%) m/m and higher by 189,000, (0.85%) y/y. Most of these workers were employed at the local level, 14.453M or 64.6%. State government workers totaled 5.095M, down 3,000, (-0.06%) m/m and down 15,000, (0.85%) y/y. The federal government provided jobs for 2.810M workers, no change m/m and up 20,000, (0.72%) y/y.
The U3 (headline), unemployment rate fell 0.1 points m/m to 4.3% in July. The U6 (which includes the U3 + includes marginally attached and part-time workers who are unable to find full time work), was flat m/m at 8.9%. Both of the metrics were at their lowest point mid-2007. The economy is still creating jobs at a healthy rate but the rate is expected to slow as the economy approached full employment.
At Gerdau, we keep a keen eye on the employment numbers, especially manufacturing and construction since this is where most long product steel ends-up. In addition we know that growth in net job creation correlates to increased steel consumption.