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Friday, May 04, 2012

More Graphs: Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes

by Bill McBride on 5/04/2012 05:43:00 PM

The first graph below shows the number of total construction payroll jobs in the U.S. including both residential and non-residential since 1969.

Construction employment decreased by 2 thousand jobs in April, but previous months were revised up slightly. Last year was the first year with an increase in construction employment since 2006, and the first with an increase in residential construction employment since 2005.

Unfortunately this graph is a combination of both residential and non-residential construction employment. The BLS only started breaking out residential construction employment fairly recently (residential specialty trade contractors in 2001).

Construction Employment Click on graph for larger image.

Usually residential investment leads the economy out of a recession, and non-residential construction usually lags the economy. Because this graph is a blend, it masks the usual pickup in residential construction following previous recessions. Of course there was no pickup for residential construction this time because of the large excess supply of vacant homes - although that appears to be changing.

Construction employment is now generally increasing, and construction will add to both GDP and employment growth in 2012.

Duration of Unemployment

Unemployment Duration This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

All categories are generally moving down. The less than 5 week category is back to normal levels, and the other categories are still elevated.

The the long term unemployed declined to 3.3% of the labor force - this is still very high, but the lowest since August 2009.

Unemployment by Education

Unemployment by Level of EducationThis graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are generally trending down. The unemployment rate for those with a bachelors degree has fallen to 4% for the first time since early 2009.

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

Diffusion Indexes

Employment Diffusion Index This is a little more technical. The BLS diffusion index for total private employment was at 56.8 in April, down from 64.7 in March. For manufacturing, the diffusion index declined to 59.9, down from 69.8 in March.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:
Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.
Job growth was not as widespread in April as in March.

We'd like to see the diffusion indexes consistently above 60 - and even in the 70s like in the '1990s.

Earlier on the employment report:
April Employment Report: 115,000 Jobs, 8.1% Unemployment Rate
April Employment Summary and Discussion
All Current Employment Graphs

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