Oct 8 2007 8:25AM | Permalink | Email this | Comments (1) |
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The economic environment for construction over the next year got a big boost when the Labor Department added 93,000 jobs to the August job count by correcting a seasonal adjustment error in public employment and also reported 110,000 new jobs in September. A posting a month ago suggested that the August jobs report was implausible and would eventually be revised. It is a huge positive for business confidence that the correction came so quickly. The summer plunge in business confidence, in part due to the erroneous jobs report, is now the major threat to business investment.

There are no readings yet on how business confidence changed after the corrected jobs report. But the immediate positive reaction in financial markets suggests that confidence has improved enough to return the GDP outlook for the next few quarters to 2.0% plus growth.

Looking past the correction, the jobs data contains very clear signals that economic growth has slowed to the subpar range. Temporary employment fell another 35,000 in September with the total loss over the last year now totaling about 200,000. Housing related employment continues to drop with 50,000 fewer jobs at homebuilding sites than three months ago. Layoffs have spread to mortgage brokers with more than 20,000 job cuts announced in the last month. Layoffs have also spread to real estate brokers but this is harder to measure since most are independent contractors. More mortgage and real estate broker layoffs are ahead.

Overall hours worked in the economy during the summer remained at the June level, about 1.6 % above the second quarter average. Together with an improvement in the trade balance, this is enough to produce 3% GDP growth in the third quarter. But economic growth will slip closer to 2% in the final quarter of the year.