Slight Jump in Job Losses During June, Unemployment Rate Essentially Unchanged

After months of depressing employment information being reported monthly by the government, May was the first month this year in which job losses were relatively moderate, although the unemployment rate increased one half of a percent. In June, however, job losses increased slightly from May, and the total unemployment rate remained virtually unchanged. During June, 467,000 jobs were reported lost, an increase from May’s 345,000 jobs lost, while the unemployment rate, which jumped from 8.9 percent to 9.4 percent in May, only moved to 9.5 percent in June.

While the last two months may appear to be somewhat chaotic when it comes to monthly unemployment numbers, seeing these figures is somewhat encouraging. In previous months this year, the job loss numbers have topped 600,000 per month. These smaller job loss months indicate that the recession that the U.S. has been struggling through since December 2007 may be showing signs of beginning to wind down, which is good for everyone.

The manufacturing job losses in June topped 136,000, although the bankruptcy proceedings involving both General Motors Corporation (Detroit, MI) and The Chrysler Group LLC (Auburn Hills, MI) had much to do with the month’s number being so high. The area that suffered the greatest job losses during June was the motor vehicles and parts sector, mainly due to most of the plants’ being shut down, while the companies worked through their respective bankruptcies. Other sectors that saw significant job reductions during the month include the fabricated metal products sector, which saw 18,000 jobs lost in June, the computer and electronic products sector with 16,000 jobs lost, and the machinery sector with 14,000 jobs lost.

The construction industry saw another month of significant job losses in June as well. During the month, 79,000 construction jobs were lost, despite the spring passage of the Stimulus Bill, which was geared to creating construction jobs across the nation. Much of the delay in allocating the stimulus funds and thus creating, rather than losing, construction jobs, can be attributed to typical governmental red tape. Many of the agencies at the state level that are responsible for developing these “shovel-ready” projects that are eligible for stimulus funding have complained that the amount of red tape increased exponentially with the passing of the bill, making it almost impossible for these projects to get off the ground to help eliminate the construction industry job losses each month.

While the total number of capital and maintenance projects scheduled to begin construction in the U.S. during June this year continued to decline, 257 projects worth $11.4 billion began construction in May, compared to 215 projects worth $9.5 billion in June. This is more a result of companies scheduling fewer projects during the past year because of concerns about the recession than anything else. Even with reduced spending numbers each month, a significant number of projects are still expected to begin construction each month in the U.S. As the financial sector continues to stabilize itself, this will lead to a much more rapid conclusion of the recession. Hopefully, in the coming months, we will continue to see unemployment numbers decline and spending numbers begin to slowly increase as the country escapes from the recession. We will have to see how things actually turn out throughout the remainder of the summer.