Regional numbers vary sharply as Charlotte and Texas post job gains in spite of a broader weakening of the economy.
Before we jump into recent employment data, let’s take a quick pulse. The unemployment rate has stayed basically unchanged at 4.9 percent. Non-farm payroll employment was down (-17,000 jobs), reflecting declines in manufacturing and construction, but there was growth in healthcare. Professional services employment was steady, with continued growth, especially in IT and accounting.
Companies are taking a cautious approach to adding jobs, and in some cases adopting hiring freezes. They do this as they try to figure out how to deal with economic uncertainty without big layoffs. Many companies burned themselves in the last dot-com-generated recession when they laid off skilled workers. As a result, they weren’t able to respond to market growth quickly enough when the economy began to bounce back.
What’s interesting is that in February the Employment Cost Index, as cited by the Bureau of Labor Statistics (BLS), reported that seasonally adjusted total compensation costs (wages, salaries, and benefits) for civilian workers increased 0.8 percent from September to December 2007. This was the same increase that we saw in the June-to-September period. This could suggest that there might be a move toward paying more to retain top talent while putting a hold on hiring any new employees.
In a January 29 report issued by The Conference Board, assessment of the job market by consumers was slightly more positive. The percentage of consumers saying jobs are “hard to get” eased to 20.1 percent from 22.7 percent in December, while those claiming jobs are “plentiful” edged up to 23.9 percent from 23.6 percent in the same period.
For the third consecutive month, the correlation gap between non-farm payroll creation and the employment rate widened.
I wouldn’t say that we’re headed toward a recession because the national unemployment rate is basically holding steady two months in a row, but we are getting closer to that scenario. Nearly 1.4 million people—almost 1 in 5 of the unemployed—had been jobless for at least 27 weeks, the point at which unemployment insurance benefits end for most recipients. That is about twice the rate of long-term unemployment before the 2001 recession. On the other hand, the Commerce Department reported that orders to factories for big-ticket manufactured goods soared in December by the largest amount in five months. This could be welcome news around a possible manufacturing rebound.
The trouble with national data in the current economic environment is that it’s not entirely representative of what’s going on regionally. For example, Texas added 218,600 jobs in 2007, with the largest gains in the professional and business services sector. This also represented the largest state employment increase from November to December (+18,600).
As we move past national employment data, regional data become very interesting. The next column will take a deeper dive into what’s happening in regional employment across the U.S.
