The US Employment Situation report (better known as the jobs report) released on Friday paints a somewhat mixed picture of the labor market. The economy lost only 36,000 jobs in February, well below the consensus forecast of a 68,000 decline in jobs and continuing the trend of moderate job losses in recent months. Contrast that with the situation a year ago, when the economy lost 726,000 jobs. (Get on top of this week's most important financial news in minutes with Water Cooler Finance.)
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However, the unemployment rate stayed at 9.7% for the second month, implying that about one in every 10 of the working population is still unemployed. As well, the broadest measure of labor market softness, the underemployment rate, rose to 16.8% last month from 16.5% in January. This is a measure of what percentage of workers are operating below their desired capacity. While the headline numbers underscore the challenging nature of the current job market, there are a number of sectors with solid job growth and a positive outlook. (For further reading, check out What You Need To Know About The Employment Report.)
The Big Picture
Month-to-month changes are one thing, but to get a better gauge of the job market, let's look at the situation over the past year. The US economy has lost close to 3.3 million jobs since February 2009, after adjusting for seasonal fluctuations. As a result, total nonfarm payrolls declined to 129.5 million in February, from 132.8 million a year ago. (Learn how to turn this report into an investment in Trading The Non-Farm Payroll Report.)
The majority of these job losses have occurred in the private sector, which accounted for 107 million jobs or almost 83% of total nonfarm payrolls. The government sector, which accounted for 22.5 million jobs or about 17% of total payrolls, has lost 100,000 jobs since February 2009. On a percentage basis, jobs have declined 2.9% in the private sector over the past year, compared with a drop of only 0.4% in the government sector.
In the private sector, the economic downturn has hit goods producers much harder than service providers. The goods-producing sector employed close to 19 million people in February, compared with 89 million employed by service providers. But while goods producers constituted only about 17.5% of private sector payrolls, they accounted for 1.8 million or 55% of private sector jobs lost. The service sector, despite its much larger size, lost only 1.4 million jobs or 45% of the total.
Despite the millions of jobs lost overall, some sectors have actually created a significant number of jobs over the past year. Strong fundamentals are driving job creation in the following sectors:
Health Care: The health care sector created 280,000 jobs since February 2009, led by solid growth in ambulatory care services - which includes offices of physicians and other health practitioners, outpatient care centers and home healthcare services. Healthcare is one of the largest industries in the US, employing 13.6 million people. The Bureau of Labor Statistics (BLS), "Career Guide to Industries, 2010-11 Edition" forecasts that the sector will generate 3.2 million new jobs between 2008 and 2018. This is more job growth than any other industry, mainly due to rapid increase in the elderly population.
Federal Government (excluding the US Postal Service): February employment of federal government workers increased by 15,000, although there was a large decline in Postal Service employment. Jobs growth in recent months is partly the result of temporary workers hired to conduct the 2010 census. Increasing government involvement in the economy and the large number of Federal workers scheduled to retire in the years ahead provides a positive outlook for continued job growth.
Social Assistance: This sector includes individual and family services, community food and housing, emergency services and vocational rehabilitation services. It generated 82,000 jobs since February 2009. In the current climate of economic uncertainty, social assistance workers will continue to be in demand.
Employment Services: This industry provides human resources services to businesses. While most jobs in this sector are temporary, these are often a stepping-stone to better paying full-time positions. The sector created 44,000 jobs in the last month, and will undoubtedly continue generating more jobs given the high level of unemployment.
Education Services: This sector has generated 179,000 jobs over the past year. With an increasing number of people going back to school to update their skills, job prospects look bright.
Computer Systems Design And Services: Although jobs in this sector require specialized skills, it has added 8,000 jobs over the past year. This industry is expected to be among the 10 fastest-growing areas in the US, with excellent job opportunities for most workers.
The ability of these sectors to generate jobs in the midst of the most challenging job market in decades is a testimony to their strong fundamentals and positive long-term outlook. Jobseekers take note. (Find out what you can do in Losing Your Job: A to Z.)
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