Employment Situation Gradually Worsening

In October, 166,000 jobs were added to the overall economy, according to the Employment Report, released by the Bureau of Labor Statistics (BLS). Generally, about 150,000 new jobs are needed each month to keep the economy stable, so this was good news. However, year-over-year employment was up only 1.2%. This is the weakest year-over-year job growth since 2004, indicating a steadily declining trend since January 2006, when year-over-year growth was 2%.

The unemployment rate edged up to 4.7%. This is also in a worsening trend, since unemployment was 4.4% in October 2006. However, it is still very low.

Manufacturing jobs continued the downward spiral begun last October. The economy now has 1.6% fewer manufacturing jobs than the year before. Manufacturing jobs are a good leading indicator of overall economic performance, since they produce big-ticket items that consumers will put off buying when the economy starts to weaken. As the orders decline, manufacturers will hire less workers, and even lay off existing workers to keep costs low. (Source: BLS, Employment Situation Summary)

What This Means for You

The employment base in the U.S. is shifting ever more rapidly away from a goods-producing to a service economy. Many experts argue that this is causing the U.S. economy to lose its competitive edge over the long term. The worsening employment situation could be a result of the Subprime Mortgage Crisis. The next employment report will be critical in determining the trend, so check back December 7. For a summary of recent trends, check out Employment Current Statistics.

Related Articles

• A Primer on the Role of Supply in the U.S. Economy
• The Impact of an Aging Labor Force on the U.S. Economy
• How the U.S. Is Losing Its Competitive Edge

employment