Key Takeaway: The return of single-digit unemployment is undeniably positive, but the devil is in the details as permanent job losses climb for a sixth consecutive month.
On August 4th, the Bureau of Labor Statistics (BLS) released its Employment Situation Summary – aka “The Jobs Report” – and the headline numbers are encouraging. Total employment increased by 1.4 million jobs in August, and the overall unemployment rate fell from 10.2 percent to 8.4 percent.
Most of the decline in the topline 8.4 percent number can be credited to the decline in workers on temporary layoff; those who have been given a date to return to work or who expect to return to work within 6 months. The August total of 6.2 million temporarily unemployed workers is 34 percent lower than in July, and 65 percent lower than the April high of 17.8 million. However, while the decline in temporary layoffs is a welcome sign, the increase in permanent job losers – workers whose employment ended involuntarily – is concerning. While the increase in permanent job losers should not muddy the overall perception of an improving labor market, it does mark the sixth consecutive monthly increase in permanent job losses, suggesting that the Covid-recession is dealing our economy lasting structural damage.
For the reported sectors most relevant to our industry, the overall employment indicators continue to trend in the right direction (as the charts below show).
The two tables above provide an overview of how employment in the sectors most relevant to the HVACR industry has changed over time. Improvements in aggregate weekly hours have mostly leveled off for the construction and manufacturing sectors, while wholesale trade and transportation and warehousing posted moderate gains in August. Aggregate weekly payrolls paint a similar picture, with manufacturing levels unchanged from July but with strong gains in the transportation and warehousing sector.
Table 4 above provides information on total employment, by relevant HVACR sector, over time. Unlike the previous two tables, where the level of sectoral granularity is limited, the raw employment data included in the fourth table is available for industry sub-sectors (which is why the sectors listed differ from the prior two tables). Broadly speaking, the news here is mixed – the total number of employed workers in nonresidential construction is at its highest levels since pre-Covid, but employment among nonresidential contractors and machinery manufacturers dropped from their July totals. Additionally, wholesale trade employment remained unchanged from its July levels, while residential construction, residential contractors, and truck transportation all saw positive gains. As we look ahead to October for the September Jobs Report, it’s unlikely that any of these categories will see significant employment gains. With few exceptions, since 2010 employment in each of these sectors has declined from August to September and we see no reason why that trend should be different now.
This article was featured in our Green Shoots Newsletter. If you would like to receive these weekly emails, and receive Green Shoots for free.