Concerns that the depressed US housing sector will remain a drag on the US labour market have mounted following the loss of nearly 120,000 jobs in construction and related businesses in the last three months for which statistics were available.
According to Financial Times analysis, the decline in housing-related employment was the biggest weight on private sector job creation as it slowed to an average of 51,000 jobs a month during the May-July period from 153,000 a month in February-April.
US Labor Department data show that some 61,000 construction jobs were lost between May and July, with another 56,000 positions shed in ancillary areas, such as furniture, building products and financial services related to property.
New employment data for August will be released on Friday, and economists expect little improvement in the current anaemic rate of private sector job creation, which is not enough to bring the unemployment rate down.
“The fact is that too many businesses are still struggling, too many Americans are still looking for work, and too many communities are far from being whole again,’’ President Barack Obama said on Monday as he revealed that his advisers were considering further tax cuts designed to encourage job creation.
Construction and associated businesses were among the hardest hit sectors in the recession, accounting for about 3m of 6.6m jobs lost after the collapse of the housing bubble in 2006.
The manufacturing sector lost more than 2m jobs in the same period, but appears to be emerging from the downturn in a healthier state. Manufacturing added 88,000 jobs between May and July, and 73,000 positions between February and April.
Construction and related industries added some 18,000 workers to their payrolls in the February-April period. The return of significant job losses in these sectors will increase worries among economists and policymakers of a further jump in long-term unemployment, as many of these workers struggle to find jobs in different industries or locations.
Construction’s contribution to overall US employment ? measured by private non-farm payrolls ? was about 6 per cent between 1980 and the early part of this decade, peaking at 6.7 per cent in October 2006. Construction now accounts for just 5.1 per cent of private sector jobs.