Employment Up in Manufacturing, Construction

In May, 218,000 jobs were created in the private sector and government gained 5,000 jobs. The number employed by the federal government decreased by 3,000 to 2.8 million, state governments increased by 2,000 for a total of 5.1 million and local governments gained 6,000 to reach a total of 14.4 million. Since February 2010, the employment low point, private employers have added 19,079,000 jobs as government has lost 150,000 (Figure 1).

In May, service industries expanded by 176,000 as goods-producing industries, driven mainly by construction and manufacturing, expanded by 47,000 (Figure 2). Since February 2010, service industries have added 15,940,000 and goods-producing 2,989,000 positions. This has been a drag on wage growth since the recession as service industries on average pay less than goods-producing industries such as manufacturing.

Construction was reported to have gained 25,000 jobs in May after a 21,000 gain in April. Year to date, construction has added 138,000 jobs. According to the Associated General Contractors of America (AGC), 78 percent of construction firms are reporting difficulty in finding qualified labor. The jobless rate among experienced construction workers is at a record low, and in the last two years, job openings in the construction industry have neared pre-housing bubble peaks.

Manufacturing added 18,000 jobs in May following a 25,000 gain in April and has added 115,000 jobs year to date. Figure 3 shows the history of construction and manufacturing employment since January 2005. Construction has added 1,674,000 jobs and manufacturing 1,202,000 since the recessionary employment low point in February 2010 (Figure 3).

Note, the subcomponents of both manufacturing and construction shown in Table 1 don’t add up to the total because we have only included those with the most relevance to the steel industry.

Table 1 shows that primary metals lost 500 jobs in May, and in the last 12 months on a percentage basis was up by slightly more than total manufacturing. Figure 4 shows the history of primary metals employment since January 2003.

Motor vehicles and parts industries were reported to have lost 4,400 jobs in May. Figure 5 shows the history of motor vehicles and parts employment. The flattening in the last two years is a reflection of U.S. light vehicle sales.

Trucking gained 6,600 jobs in May, 17,100 jobs year to date and is at a 15-year high (Figure 6).

SMU Comment: This is the first time we have produced a separate report on employment by industry. We will continue to develop this analysis in coming months. Employment growth in manufacturing and construction are signposts for steel sales activity and at present they look favorable.

Explanation: On the first Friday of each month, the Bureau of Labor Statistics releases the employment data for the previous month. Data is available at www.bls.gov. The BLS employment database is a reality check for other economic data streams such as manufacturing and construction. It is easy to drill down into the BLS database to obtain employment data for many subsectors of the economy. The important point about all these data streams is in which direction they are headed.