Employment Trends in Manufacturing; Construction; Oil & Gas; Professional & Business Services; Information ... - WOLF STREET

The Good, the Bad, and the Ugly?

By Wolf Richter for WOLF STREET.

Employers added 275,000 employees to their payrolls in January. Over the past three months, they added 794,000 employees or on average 265,000 per month, according to data from the Bureau of Labor Statistics today. These increases are at the upper edge of the increases before the pandemic. But they’re not spread equally across the economy.

Some sectors have surged to new highs, such as construction. Others are plateauing at very high levels, such as Manufacturing and Professional & Business Services. But others are heading lower. Retail has a structural problem. Information, where many tech and social media companies are, dropped sharply, but in recent months re-added jobs hand over fist. And then there’s oil and gas extraction: US production has soared, making the US the largest producer of crude oil and natural gas in the world. But employment around drilling rigs is a fascinating phenomenon. And we’ll look at all of them.

In total, business and government entities added an average of 265,000 employees per month over the past three months:

This brought total payrolls to 157.8 million, up by 2.75 million from a year ago.

Construction, from single-family housing to highways. We have watched how homebuilders are maintaining sales by cutting prices and buying down mortgage rates, and they’re building at a solid pace. And we’ve been amazed by the eyepopping boom in spending on factory construction. And overall construction payrolls surged to another all-time high:

• Total employment: 8.16 million, new record.
• 1-month growth: +23,000
• 3-month growth: +60,000

Manufacturing: Employment has formed an upward slanted high plateau for a year after the post-pandemic employment boom. Strikes are occasionally putting a dent into it, but when the strike is over, employment recovers. February employment was the second-highest, after the recent high set in January.

• Total employment: 12.96 million
• 1-month growth: -4,000
• 3-month growth: +16,000

The categories are by work location. The surveys are sent to business facilities by address. The primary activity at that facility is what determines the category. Just to illustrate: A worker at an Amazon fulfillment center counts under “transportation and warehousing”; a driver operating out of an Amazon delivery center also counts as “transportation and warehousing”; a worker at an office of Amazon’s AWS division would count under “Professional and business services”; a worker at a location that deals with the retail aspects of Amazon’s business would count under “Retail”; a worker at an office that primarily works on the software aspects of Amazon’s ecommerce business might count under “Information.”

Oil and gas extraction, tracking employment on drilling sites. This tiny sector in terms of employment is huge in global significance.

US production of crude oil and natural gas has exploded since fracking became a big factor in 2008. By now, the US has become the largest producer of crude oil and natural gas globally, with crude oil production in 2023 soaring to a record of 12.9 million barrels per day, as the US became a net-exporter of crude oil and petroleum products; and with natural gas production soaring to a record 41.3 trillion cubic feet in 2023, as the US became the largest LNG exporter in the world.

The oil and gas sector has armies of workers engaged in technical, scientific, management, and support work in office towers and labs, and those employees are accounted for in the vast sector of Professional and business services and other sectors. And it has workers engaged in the Transportation sectors, etc., that are accounted for in their respective sectors.

But only a small number of people work around drilling rigs. And even as production has soared, employment plunged during the years of the Great American Oil Bust starting in 2015, when over production cause the price of oil in the US to collapse, and hundreds of drillers filed for bankruptcy.  The solution was technical innovation, cost cutting, and labor efficiencies to bring down production costs.

Employment around drilling rigs bottomed out in late 2021 and has since then picked up some but remains very low despite record production.

• Total employment: 119,000
• 3-month growth: +2,000

Professional and business services, the largest sector by employment, includes Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support, and Waste Management and Remediation Services.

Some of the tech and social media companies are included here, others are in “Information” (below) or in other categories.

• Total employment: 22.9 million, a new record
• 1-month growth: +9,000
• 3-month growth: +62,000

“Information” is a small sector that includes some of the tech and social media companies with big layoff announcements in 2022 and early 2023: web search portals, data processing, data transmission, information services, software publishing, motion picture and sound recording, broadcasting including over the Internet, and telecommunications.

• Total employment: 3.02 million
• 1-month growth: +2,000
• 3-month growth: +21,000

Employment had peaked in November 2022, then over the next 12 months had dropped 4.2% through October 2023. But in November, employers started adding again, and February marked the fourth month in a row of increases. AI mania had a lot to do with it:

Healthcare and social assistance: This second largest sector is an employment juggernaut.

• Total employment: 22.2 million, a new record
• 1-month growth: +91,000
• 3-month growth: +253,000

Retail trade includes workers at brick-and-mortar retail stores – malls, auto dealers, grocery stores, gas stations, etc. – and other retail locations such as markets. It does not include the tech-related jobs of ecommerce operations, and it does not include drivers and warehouse employees. A big portion of this sector has been under heavy pressure from ecommerce:

• Total employment: 15.6 million
• 1-month growth: +19,000
• 3-month growth: +66,000

Leisure and hospitality – restaurants, lodging, resorts, etc. – is now back at its prior record of February 2020. Employers have had a hard time hiring, as working conditions and schedules are often tough, including split shifts, weekends, holidays, and evenings. And pay can be relatively low, and other sectors with higher pay were aggressively recruiting. But they’re back where they had been four years ago.

• Total employment: 16.9 million
• 1-month growth: +58,000
• 3-month growth: +107,000

Financial activities include finance and insurance plus real estate (renting, leasing, buying, selling, and management). Employment has been on a slightly upward-slanted plateau for the past 8 months, after the big gains in the prior years.

• Total employment: 9.2 million
• 1-month growth: +1,000
• 3-month growth: +6,000

Transportation and Warehousing: the breathtaking demand for goods in 2020 through 2022 (that all had to be transported) triggered transportation nightmares and led to record surging employment. But then the goods sector reverted to something close to normal, and employment in transportation and warehousing began to decline off these record high levels. But February showed a big increase in employment, the first increase in months, and the biggest in over a year:

• Total employment: 6.5 million
• 1-month growth: +20,000
• 3-month growth: -28,000

Wholesale Trade, the second month in a row of declines, after the huge surge:

• Total employment: 6.2 million
• 1-month growth: -1,000
• 3-month growth: +3,000

Arts, Entertainment, and Recreation includes spectator sports, performing arts, amusement, gambling, recreation, museums, historical sites, and similar. The relatively small sector booked big employment gains that took it from record to record in recent months. Consumers are splurging on experiences, and companies are staffing up.

• Total employment: 2.6 million, a new record
• 1-month growth: +13,000
• 3-month growth: +57,000

Jobs in federal, state, and local governments. A large portion of state and local government employees work at schools, colleges, and universities. Note that employment at the federal government spikes every 10 years for taking the census.

First, we’re going to look at total government jobs – federal, state, and local – as a percent of total employment:

And the number of employees:

• Total employment: 23.2 million of which 2.9 million are federal civilian employees
• 1-month growth: +52,000
• 3-month growth: +180,000

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