The housing market decline and the associated home-lending market troubles continue to loom over the broader U.S. economy. The effect of the housing market decline is still largely unknown, but today’s release of new employment data shows some strength remains in the broader labor market.
The economy created a net of 180,000 new jobs in March 2007, up from a revised 113,000 new jobs in February, according to the new Bureau of Labor Statistics data. Yet manufacturing employment continues to decline with a drop of 16,000 jobs in these sectors. Non-residential construction and service providing sectors did see gains over the past month, but there was no increase in residential construction.
The March numbers show a welcome increase, but job market growth still continued on a mediocre upward trend. Monthly job growth averaged 152,000 during the first quarter of 2007, which shows a decrease from the average of 189,000 new jobs per month in 2006 and 212,000 new jobs per month in 2005.
The unemployment rate remained essentially unchanged, falling by 0.1 percentage points to 4.4 percent. This slight change was due to an increase in employment complimented by a decrease in the number of people unemployed.
Employment in the residential construction industry peaked in September last year and continues to remain weak. The number of people employed last month held roughly constant with a decline of just over 1,000 jobs last month, as shown in the figure below. Yet this change brings the total job loss in the residential construction industry 27,800 jobs, or 2.7 percent, since the peak last year.
Some areas continue to grow despite labor market weaknesses. The health care industry added 29,500 new jobs in March. The leisure and hospitality industries, including restaurants and hotels, added 21,000 new jobs. And the service sector as a whole increased employment by 137,000 last month.
Labor force participation
The labor force increased by 195,000, and the number of people classified as out of the labor force increased by 5,000 last month. The number of people unemployed also decreased by 141,000, which combined with an increase in employment brought the share of the population currently employed slightly up to 63.3 percent, still well below the peak of 64.7 percent prior to the last recession.
The data overall continue to indicate a somewhat stable, but unspectacular, labor market. These employment numbers show that the broader market may be experiencing only minor spillover from the housing sector, but the full extent of the damage may still be to come.
John S. Irons is the director of tax and budget policy at the Center for American Progress.