Private Sector Employment Picture

The construction industry lost 23,000 more jobs in October. The construction industry has been losing jobs since January 2007, a total of 2.313 million.

Dirk van Dijk, CFA, chief equity strategist for Zacks.com, reports the Automatic Data Processing employment survey shows private sector employment rose by 43,000 in October. ADP is the largest payroll-processing firm in the country. Van Dijk says these numbers are “not even close to the level we need to make a serious dent in the vast army of the unemployed. It is not really even enough to keep up with the growth of the labor force due to population growth.”

Dirk van Dijk, CFA, chief equity strategist for Zacks.com.

Small Businesses
Small businesses, defined as those with fewer than 50 employees, rose a total of 21,000 jobs in Oct. Medium-sized firms, those with between 50 and 499 employees, gained 24,000 jobs. Large firms, with 500 or more employees, dropped 2,000 jobs.

Large Businesses
Large businesses, a relatively small share of total employment, accounting for just 17.502 million out of a total of 107.056 million private sector jobs. Small business is the largest source of employment at 48.298 million, followed by medium businesses at 41.256 million.

Jobs were lost from the goods producing sector, which fell a total of 34,000 jobs. Overall goods producing industries are not that big a source of jobs, just 17.424 million (16.3%) in total.

Construction
The construction industry lost 23,000 more jobs in October, and has been losing jobs since January 2007, a total of 2.313 million. That is more than one fourth of the total jobs lost in the entire economy since the recession started.

Historically, construction employment (especially residential construction) is one of the first areas to recover when the economy starts to rebound, says van Dijk, but with the great weakness in new home sales in recent months, he sees very little reason to believe construction employment is going to pick up anytime soon.

High vacancy rates in most forms of commercial real estate, van Dijk believes, means there is not going to be much of a pick up in commercial construction anytime soon. The billing index from the American Institute of Architects, which has been below 50 since January 2008, indicates falling work for architects. Commercial construction means the need for architects. There is about a nine month to a year lag between when the architects send out their bills and when construction spending (and employment) happens.

Manufacturing
Manufacturing has been a bright spot in this recovery, but in October factory jobs fell for the third month in a row, down 12,000 on top of a decline of 17,000 in September. It appears much of the gains in manufacturing employment were due to inventory restocking, now largely complete.