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Economy in Brief

U.S. Services Jobs Show Renewed Weakness Following Earlier Moderate Gains
by Tom Moeller August 23, 2010

Earlier improvement in service-sector hiring ran out of gas during the last few months. If it weren't so widespread, the slowdown wouldn't be too noteworthy. But the fact that it's reached into sectors which normally are resistant to macro-economic forces is troubling. In the past, employment has been a coincident indicator of economic growth, so maybe future improvement isn't threatened. But what can be said is that there is little if any forward momentum which could potentially aid consumer sentiment, spending and output.

After modest gains earlier, developing weakness is most evident in fewer jobs in the financial, professional and business service sectors. Together these areas  account for one-quarter of U.S. payrolls. Slow job growth also is evident in the retail sector which accounts for nearly twenty percent of total jobs. Fortunately, slow growth in these lagging sectors is accompanied by stability in the education and health areas which also make up nearly one-quarter of the workforce.

The government sector also shows hiring weakness. This development is a clear outgrowth of weakness in income tax revenues. Aside from the hiring of workers who took the Census, job growth in the Federal government sector never developed forward momentum. Jobs actually have fallen slightly in 2010 following fairly strong growth during 2008 and 2009. Amongst employees in state governments and local municipalities, the recent news has been dismal with the downturn in real estate value and property taxes.

Payroll Employment
(M/M Chg in 000s)
July June May Y/Y 2009 2008 2007
Private Services 38 34 30 0.3% -3.4% -0.2% 1.7%
   Retail Trade 7 -21 -6 -0.4 -4.9 -1.5 1.1
   Information Services 1 -14 -2 -2.6 -5.9 -1.6 -0.2
   Financial Activities -17 -12 -9 -1.9 -4.7 -1.9 -0.3
   Professional & Business Services -13 23 26 1.6 -6.5 -1.2 2.1
   Education & Health 30 26 25 1.9 1.8 2.8 2.8
   Leisure & Hospitality 6 21 -15 -0.0 -2.5 0.1 2.4
Government -202 -252 381 -0.0 0.2 1.3 1.1
   Federal -154 -225 408 7.1 2.4 1.0 0.1
     Temporary Census Workers (NSA) -143 -225 410 -- -- -- --
   State -10 -13 -12 -0.4 0.1 1.1 0.9
   Local -38 -14 -15 -1.3 -0.1 1.4 1.4
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