Federal Reserve & Interest Rates

The United States Department of Labor reported the latest unemployment statistics yesterday, and things are not looking good. The non-farm payroll employment rate is at 4.9%. While there was some job growth in healthcare, there were declines in construction and manufacturing. The net job reading showed a loss of 17,000 jobs for January.

Overall, construction employment has declined a staggering 284,000 since September of 2006. January numbers show a loss of 27,000 in construction.

Manufacturing has lost 269,000 since January 2007. The January 2008 numbers alone for showed -28,000.

Commercial banking lost 4,000 jobs. Other financial services lost 5,000 jobs.

That balance in the unemployment rate stems from steady job growth in healthcare and professional and technical services. Healthcare grew by about 27,000 in January and professional and technical services increased by 49,000 in December and was little changed for January. For 2007, jobs in the professional and technical services increased by over 300,000 jobs.

The employment data was the last symbol of hope for many economists hoping that the economy will hold off on plummeting into deep recession if people are still working. It seems that job growth in sectors unrelated to the housing industry is not covering enough of the related losses in the real estate sector.

Could this be the “straw that breaks the camel’s back?” Some economists are worried over the relatively small decrease in jobs the report of a single month. There is enough positive employment data in certain sectors that could continue to increase in the coming months. Others speculate that negative employment data is the last factor in determining whether or not the economy is falling into an undeniable recession.

The December unemployment rate showed 5%, which was .10% higher than the January figure of 4.9%. From the broad standpoint, it seems January showed an overall ease in unemployment. Going forward, there may be enough job growth from sectors unrelated to the housing and lending markets to send unemployment back on a slight downward trend. If February shows at least the same 4.9% rate or a bit lower, we can be pretty confident that unemployment is not on a dangerous upward trend. If there is another sharp decline in jobs related to the housing and lending sectors within the first quarter, unemployment might become yet another forefront concern.