Economy

Employment by Industry Through May 2019

June 11, 2019

The Bureau of Labor Statistics issued a dismal employment report for May with the U.S. economy seeing a net gain of just 75,000 nonfarm jobs. Last month, 90,000 jobs were created in the private sector while government lost 15,000 positions. To put these figures in perspective, they should be considered over a longer time frame, however.

Table 1 breaks total employment down into service and goods-producing industries and then into private and government employees. Most of the goods-producing employees work in manufacturing and construction, and the components of these two sectors of most relevance to steel people are broken out in Table 1.

In May, the number employed by the federal government increased by 4,000. State governments cut 10,000 and the local level cut 9,000. Since February 2010, the low point of total nonfarm payrolls, private employers have added 21,342,000 jobs as government has gained 38,000 (Figure 1).

In May, service industries expanded by 67,000 as goods-producing industries, driven by construction and manufacturing, gained 8,000 (Figure 2). Since February 2010, service industries have added 17,929,000 and goods-producing 3,451,000 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. The good news is that in the last 24 months the rate of job creation in goods-producing industries on a percentage basis has been almost twice as much as in service industries.

Construction was reported to have gained 4,000 jobs in May as manufacturing gained 3,000. Since and including January 2018, construction has added 389,000 and manufacturing 294,000 jobs. Manufacturing productivity improved by 1.2 percent in Q1 2019. Figure 3 shows the history of construction and manufacturing employment since May 2005. Construction has added 1,982,000 jobs and manufacturing 1,386,000 since the recessionary employment low point in February 2010.

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 200 jobs in May, and in the last 12 and 24 months has gained on a percentage basis less than manufacturing as a whole. Figure 4 shows the history of primary metals employment since January 2003.

Motor vehicles and parts industries were reported to have gained 2,800 jobs in May for a 12-month gain of 11,000. Figure 5 shows the history of motor vehicles and parts job creation.

Trucking gained 300 jobs in May, resulting in a 12-month gain of 31,600. Employment in truck driving is one of SMU’s recession monitors and Figure 6 suggests that at the present time the economy is still strong.

SMU Comment: The May employment report should be considered in a longer time frame than one month because of the extreme variability of the BLS data. In 2019, January and April had a very strong result. February and May were dismal and March was so-so. In the last 24 months, goods- producing industries that are the steel consumers have added jobs almost twice as fast as service industries.

Explanation: On the first or second 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 the direction in which they are headed.