U.S. Unemployment Situation Fails to Improve in September

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Researched by Industrial Info Resources (Sugar Land, Texas)--It has become a bit of a "broken record" situation in the United States. With the mid-term elections fast approaching, the final unemployment numbers were revealed Friday, and nothing has changed, yet again. A total of 95,000 jobs were lost in September, which held the national unemployment rate at 9.6% for yet another month, a lack of improvement that threatens to prove problematic to a number of Democratic candidates in next month's elections. Many economists have been pointing fingers at the private sector for not hiring at a faster pace. However, in September, it was the government that lost more jobs. The private sector added 64,000 jobs during the month.

A total of 159,000 government jobs were lost in September, mainly due to cutbacks at the local level and additional temporary census workers' being let go. Industrial spending has remained strong this summer, but has not led to significant job gains. In September, more than 460 capital and maintenance projects worth an estimated $12.9 billion began construction. This remains in line with August spending totals of $12 billion in the form of 300 projects and is an increase over July's 487 projects worth $10.4 billion. The average spending per month for the third quarter was $11.8 billion, a significant amount of investment by industry, especially in a wavering economy.

The Power, Industrial Manufacturing and Pharmaceuticals & Biotechnology industries drove spending during September. The Power Industry accounted for almost half of the total investments made during the month, with $6.2 billion in capital and maintenance projects beginning construction. The Industrial Manufacturing Industry contributed $2 billion to the total, while the Pharmaceuticals & Biotechnology Industry added another $1 billion.

The problem appears to lie in the fact that while industry is adding jobs and spending a significant amount of money during each month of project activity, companies are still not hiring in large numbers. This indicates that a more cautious approach to how companies spend their money is being taken each month, which is not entirely surprising given the overall economic situation. Another problem is that the much-vaunted stimulus program that began last year has not contributed the jobs promised when it was passed, and now, almost 18 months later, many of the projects it did finance are nearing completion, which could potentially mean additional jobs lost in the coming months.

The construction sector continues to struggle, as another 21,000 construction jobs were lost in September. This essentially counters the 31,000 jobs gained in that sector in August and indicates that long-term construction jobs are difficult to come by. With the housing market uncertain, it is not likely that construction jobs will show stability for some time to come.

Some of the bright spots in employment for September include the transportation and warehousing sectors, which added 9,600 jobs; temporary help services, which added 16,900 jobs; the health care and social assistance sector, which added 32,000 jobs; and the leisure and hospitality sector, which added 38,000 jobs. The mining and logging sector saw modest increases, as did the motor vehicles and parts sector. This was countered by the losses in construction and government jobs.

The bottom line is that the unemployment problem is not likely to improve significantly until next year. Companies are spending, but not doing significant hiring, which, given the economic situation facing the country, is not unexpected. After the consolidation that occurred over the past two years as companies struggled to stay ahead of the economic downturn, it is going to take a significant amount of time to return to a more acceptable unemployment rate.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.