For the first time in nearly seven years the U.S. economy lost jobs as the latest jobs report from the Bureau of Labor Statistics (BLS) reported that the economy shed 33,000 jobs in September. The job losses can be attributed to a sharp employment decline in food services and drinking places and below growth-trend in some other industries as a direct result of hurricanes Harvey, and Irma. Note the BLS surveys do not include Puerto Rico or the U.S. Virgin Islands.
This brings the total number of seasonally adjusted (SA), non-farm people employed in the U.S. in September to 146.659 million (M), -0.02% month on month, (m/m). Over the past 12 months the U.S. economy has added 1.851M jobs for an average of 154,250 per month. This represents a +1.3% year on year, (y/y) increase. Prior to September the average job gain over the previous 12 months was 172,000.
The headline, (U3) unemployment rate fell 0.2 percentage points to 4.2% in September as the number of unemployed persons declined by 331,000 to 6.8 million. Both measures were down over the year. The employment-population ratio increased by 0.3 percentage point to 60.4% in September and has increased by 0.6 percentage point over the past 12 months. The labor force participation rate, at 63.1%, changed little over the month and has shown little movement over the year. Job gains occurred in health care (+23,000) and transportation and warehousing (+22,000).
The SA goods producing sector employed 20.117M people in September, up 70,000, (+0.35%), m/m and by 516,000 (2.63%), y/y. The SA service providing sector employed 126.613M people in September, up 86,000 jobs (0.07%), m/m and 1.614M (1.29%), y/y.
Figure 1 shows manufacturing and construction employment on the same chart from 2005 to present. Both manufacturing and construction employment are showing growth, construction is growing at a faster rate on a percentage basis.
The SA manufacturing sector employed 12.447M in September, off 1,000 (-0.01%), m/m and higher by 117,000 (0.90%), y/y. The two largest employment categories within manufacturing are motor vehicles and parts and transportation equipment. There were 939,600 employed in the manufacture of motor vehicles and parts, down 3,000 m/m, (-0.34%). On a y/y measure jobs in this sector were higher by 2,000, (0.17%). The transportation equipment field employed 1.618M. Jobs in this sector were down by 1,000, (0.07%) m/m and were up by 12,000, (0.70%) y/y.
The construction sector employment a total of 6.911M, up 8,000, (0.12%), m/m and up by 240,000, (3.6%), y/y. Most construction workers are employed constructing buildings. In September there were 1.528M workers constructing buildings, up 1,000, (0.06%) m/m and up 63,000, (4.30%) y/y. Heavy civil engineering was the next largest construction segment employing 980,500 in August, up 7,000, (0.68%) m/m and higher by 6,600, (0.71%) y/y. Highway, streets and bridge construction employed 377,200 in August, up 1,000, (+0.32%) and up the same amount y/y. Industrial building construction employment was higher by 3,000 (+1.95%) m/m and stronger by 3,300, (+2.10%) y/y. Commercial building construction jobs rose 4,000, (+0.63%) m/m and were up 3,800, (+0.65%) y/y.
Looking elsewhere in the economy; retail employed 15.809M workers down 1,000, (-0.01%) m/m and down 135,000, (-0.85%) y/y. Rail transportation employed 206,300 people, flat m/m and down 10,000, (-4.49%) y/y. Truck transportation employed 1.471M folks in September, flat m/m, (-0.11%) but up 9,000, (+0.62%) y/y. Utilities jobs totaled 552,600, flat m/m and down 12,000, (-2.14%) y/y. Financial Activities had jobs for 8.473M workers, up 10,000, (+0.12%) m/m and up 153,000, (+1.84%) y/y. Education and Health Services is a large employment field with 23.217M people, up 27,000, (+0.12%) m/m and up 409,000, (+1.79%) y/y. The entertainment sector employed 15,873 people in September, tumbling 111,000, (-0.69%) m/m, but up 317,000, (+2.0%) y/y. Government is a very large employer with 22,337M total employed, up 7,000, (+0.03%) m/m and higher by 121,000, (+0.54%) y/y.
Figure 2, compares the recent history, (2000 to present) of Service providing jobs, (left-hand Y axis) to Goods providing jobs (right-hand Y axis). In September 2017, service providing jobs accounted for 86.3% of total non-farm employment in the U.S., the remaining 13.7% was in the Goods providing sector. In September 2000, the Service sector employed 112,217M people for 86.1% of total non-farm employment, leaving 18,043M or 13.8% of the jobs in the Good producing sector, little changed from current values. As the slope of the two lines illustrates Service jobs are growing at a faster rate and were not as prone to layoffs during the recessionary period.
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.