The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

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November 04, 2005

An Employment Growth Spoiler

It's pretty tough to put a positive spin on the October employment report.  The summary, from UPI:

U.S. employers hired 56,000 more people -- about half as many as expected -- than last month as leisure and hospitality employment fell sharply.

Economists had expected about 110,000 new jobs in October, but with hotels and restaurants in seasonal staff reductions the outcome was much weaker than anticipated, the Labor Department said Friday.

That decline was not offset by modest increases in other industries employment levels. The upshot was a national unemployment rate actually dropped to 5 percent from 5.1 percent in September.

Builders hired 33,000 more people last month compared with an average monthly increase of 21,000. Some of that increase stemmed from post-hurricane reconstruction.

Financial services companies boosted staff by 22,000, most of it to increase credit intermediation services.

Healthcare and social assistance together added 23,000 positions.

Over at Angry Bear, Kash focuses on the large role of construction employment in October, and it is surely true that construction spending was disproportionately responsible for what scant job growth  we enjoyed last month.  Here is the breakdown of employment gains by sector in October:


Here is the pattern year-to-date:


So, it is certainly true that construction employment took a lead role in October's net job creation, in contrast to the experience over the year as a whole.  But overall the patterns are not that far off what we have been seeing in 2005.   And, post-hurricanes, shouldn't we be expecting  some step-up in the share of employment accounted for by the construction sector as the "rebuilding bump" starts to settle in?

In general, I'm not sure what to make of situations in which total employment gains are concentrated in a small number of sectors.  Month-to-month fortunes, as we have warned on many occasions, are quite volatile, and at any given time some types of business activity are waxing, and some are waning.  For my money, it is still the total nonfarm employment picture that is the most informative. 

That, of course, is not much comfort this month. Barry Ritholtz, taking a swipe at the optimists, suggests that the weak employment numbers tell the real story of the current economy.  But the big picture, I think, is not so clear cut.  Certainly the tenor of the incoming news seems to be changing day to day.  My impression still is that things on the real side of the economy are, at worst, mixed.


Calculated Risk warns we are heading toward the unacceptable threshold for Bush-term job performance. pgl explains why unemployment fell.  The Skeptical Speculator observes that outside of the United States today's news was generally positive.

November 4, 2005 in Labor Markets | Permalink


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» Latest employment statistics: the clear thing is that it's not at all clear from Econbrowser
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Tracked on Nov 6, 2005 3:33:27 PM


I am confused by Blogdom's insistence on writing about labor demand as though we were in a liquidity trap and deficient demand were an issue. I won't make the argument because I know you can sound it out in your own head. Just, what's up with dat?

Posted by: Gerard MacDonell | November 05, 2005 at 02:36 PM

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