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Good or bad employment news? Depends on the sector.

September 7, 2012

 By Jeff Pinkerton

The string of lackluster national employment figures continued in August, but when we break it down by sector, there’s good news and bad news.

Overall, the economy added only 96,000 jobs. This may sound like a big number, but typically we need more than that — about 150,000 new jobs a month — just to accommodate new entrants into the workforce. The unemployment rate actually declined from 8.3 percent to 8.1 percent, but that was because the total labor force declined by 368,000 as more individuals either retired from their jobs or simply quit looking for work.

Looking closer at the numbers, we see the change in unemployment varied quite a bit by sector. For example, the manufacturing sector, which had seen nothing but growth all year, lost 15,000 jobs in August. The government sector lost an additional 7,000 jobs nationwide, continuing a yearlong trend that has seen government employment decline by 91,000 since January.

On the positive side of the ledger, the leisure and hospitality sector added 34,000 jobs in August; professional and business services added 28,000; and the trade, transportation and utilities sector added 29,000.

One more positive note, which we might need a microscope to see, is the increase in construction employment. The sector only grew by 1,000 in August, but the main thing is that it grew at all. After steep declines, construction has been growing ever-so-slightly since May.


The government sector has been the biggest drag on employment so far this year.  Some of this decline might be by design, as there is currently a significant emphasis across the nation on cutting the size of government. If the government sector had shown even modest growth throughout the year, we would be closer to employment levels that could absorb new entrants into the workforce and show a real increase.

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