This Just In | |||||||||||
Economics Watch | |||||||||||
March 11, 2002 Economic indicators over the past week have reinforced the impression that this country is successfully dodging the recession bullet. Surveys for the U.S. Department of Labor show that employment is up for the first time since last summer, with the construction industry accounting for a large share of the gain. Showing the first rise in business payrolls since July 2001, February saw 66,000 new jobs. Although this is a small percentage against the base of 131 million payroll positions currently in the U.S., it is the biggest rise since February 2001. Unemployment figures for February jibed with the rise in payroll positions, showing a drop to 5.5% from 5.6% in January. The unemployment rate in January also showed a drop from the previous month, albeit for unusual reasons. In January there was an increase in the number of people not looking for work (for whatever reason) and a fairly static number of available jobs, so the unemployment rate showed a somewhat misleading decrease. For February, though, the survey showed a jump in the size of the labor force (those people seeking a job) and an even bigger jump in available jobs. With jobs increasing at such a healthy rate, we may have reached a watershed for employment in this recessionary cycle. Of those new jobs, 25,000 were in the construction sector. For the construction sector to account for 38 percent of the entire payroll position increase is phenomenal when one considers that the industry accounts for 5 percent of all jobs. Employment figures showed the manufacturing sector is down by 50,000 jobs for February. This sector includes high-tech industries. This downturn should not affect the bright picture painted by other indicators. It is important to note that productivity in manufacturing has shown a steady 3-1/2 to 4 percent growth for the past decade despite fluctuations in the workforce. In other words, manufacturers are able to maintain production levels even when they have to let people go. A quick overview Preliminary reports for that Fed meeting are that most regions of the country are doing well, with more regional positives than negatives. Texas is having a difficult time whereas the South Atlantic region is doing well and the Middle Atlantic, Northeast, and Northwest (including the Bay area) are showing upturns. In terms of markets, although office occupancy and construction are down, the housing market is maintaining its strength. Industrial production is moving up, according to a survey from the Institute of Supply Management, which indicates that in February we will have seen the first positive numbers in 1-1/2 years. Consumer optimism is up, and chain retail store trends have been extremely positive right now. Given the apparent state of the economy, then, it seems that the compromise economic stimulus package is too late to help the economy. In fact, economists are already wondering if lowered interest rates may overheat the economy because the recession turned out to be very mild by historical standards. The newly enacted economic stimulus package could be seen, in that light, as a possible impediment to controlling inflation in the coming year. Nonetheless, as the expected upturns work their
way through the marketplace, architects should expect a 46% drop
in nonresidential construction for the next six months, at which point
we should be poised for a strong recovery. Copyright 2002 The American Institute of Architects. All rights reserved. |
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