Private Sector Job Growth Slows in May

Total construction employment - including non-residential employment - fell 35,000 in May after rising the previous two months. The overall unemployment rate for construction inched upward to 20.6 percent in May from 20.3 percent the month before. Courtesy of Construction Safety Blog

Employment in May increased by 431,000 jobs at a seasonally adjusted rate following an increase of 290,000 jobs the month before, which should be good news for housing.

However, the large increase in May was primarily because the Census Bureau added 411,000 temporary census workers. (Overall, government jobs increased only 390,000 for the month, largely because of cutbacks at the state and local levels).

The private sector added 41,000 jobs for the month, including 31,000 temporary workers. Unemployment rate fell from 9.9 percent in April to 9.7 percent in May.

The heavy reliance on temporary workers indicates that businesses are still uncertain about the recovery and, in particular, how long the boost in demand for their products and services will last. Hiring temporary workers at this stage in the recovery enables employers to hedge their bets. If demand is sustained - as National Association of Home Builders forecasts - many of the temporary positions in the private sector will become permanent.

Despite the disappointing private sector job growth for May, it's predicted that employment will continue to improve throughout 2010 and 2011. The unemployment rate peaked at 10.1 percent in October 2009. Expect it to be near 9.3 percent by the end of the year.

Employment stability and job growth are keys to a housing recovery. In addition to alleviating workers' fears about their next paycheck, improving employment measures help boost the confidence of households that are considering buying a home. And once more homes are purchased, demand for landscape improvements will increase, helping everyone in the industry.

While overall job growth has been positive, residential construction has been bleeding jobs, albeit at a slower rate during the past few months. In May, 6,100 jobs were lost, down from the 6,800 job losses the month before and from the 81,700 residential construction jobs lost in November 2008.

- Courtesy of NAHB