Friday, December 08, 2006

November Employment Report

by Bill McBride on 12/08/2006 09:44:00 AM

The BLS reports: U.S. nonfarm payrolls rose by 132,000 in November, after a revised 79,000 gain in October. The unemployment rate rose to 4.5% in November, compared to 4.4% in October.

Click on graph for larger image.

Here is the cumulative nonfarm job growth for Bush's 2nd term. The gray area represents the expected job growth (from 6 million to 10 million jobs over the four year term). Job growth is about in the middle of the expected range.

The following two graphs are the areas I've been watching closely: residential construction and retail employment.

Residential construction employment decreased by 15,500 jobs in November and is down 110 thousand, or about 3.3%, from the peak in February. This is the beginning of the loss of several hundred thousand residential construction jobs over the next year or so.

Note the scale doesn't start from zero: this is to better show the change in employment.

Retail employment increased 20,400 jobs in November. The YoY change in retail employment is now -0.4%.

The YoY decrease in retail employment is concerning: see Retail Employment

Overall this is a solid report, but there are weaknesses. It appears nonresidential construction might have peaked too:

Construction employment declined by 29,000 in November, following a loss of similar size in October. The November decline was spread across all component industries.
And other weak areas:
Manufacturing employment continued to trend down (-15,000) in November. Motor vehicles and parts lost 7,000 jobs. Employment continued to fall in two construction-related industries: wood products (-6,000) and furniture and related products (-5,000).
The expected job losses in residential construction employment has just started, but the spillover to retail isn't significant yet. I expect the rate of residential construction job losses to increase over the next few months.