... and that 900,000 jobs "doesn't include a large number of threatened jobs in real estate, mortgage banking and other housing-related fields."
Things could get really ugly this year.
(click on the link imbedded in the article to bring up the graph ... it wouldn't copy over)
http://www.marketwatch.com/news/sto...x?guid={102B585B-9CC4-49B5-954B-5706815027D7}
ECONOMIC REPORT
Many layoffs coming in housing, economists say
Data revisions show few construction jobs have been lost... yet
By Rex Nutting, MarketWatch
Last Update: 2:26 PM ET Feb 6, 2007
WASHINGTON (MarketWatch) - The home-building industry collapsed in 2006, but surprisingly few workers lost their jobs, revised government data show. That could change this year, economists said.
Between December 2005 and December 2006, the number of building permits for new homes plunged 23.5%, while spending on residential construction projects fell by 12.4%. But over that time, employment in residential construction fell by just 1.4% from 3.38 million to 3.34 million.
The drop of 47,000 home-building jobs in 2006 is a big change from the 638,000 added in the previous three years, but it's much less than the 100,000 that were reported as lost before the Labor Department released revisions to last year's employment data.
Two economists think construction employment will plunge this year as many of the homes started last year are finished. It typically takes six months for a new home to go from the groundbreaking to the final steps of construction. The latest data show 1.26 million homes were still under construction in December.
"What it means is that we have a steeper cliff to fall off from," wrote David Rosenberg, chief North American economist for Merrill Lynch, in a research note.
The drag from housing will diminish this year, wrote Steven Wieting, an economist for Citigroup, in a research note. But despite his general optimism, Wieting believes the worst is yet to come for jobs.
"We are doubtful, however, the gross job losses tied to the housing cycle are any more than one-third complete," he wrote. He's looking for losses to "easily exceed a half million."
Rosenberg estimates that employment in residential construction will fall about 20% in 2007, or about 600,000 jobs. In essence, the number of jobs in home-building will return to 2002 levels as the pace of home building does.
In addition, of some 3 million manufacturing jobs tied directly to housing, about 10% will disappear, Rosenberg estimated.
All told, that's about 900,000 jobs likely to be lost this year, and it doesn't include a large number of threatened jobs in real estate, mortgage banking and other housing-related fields.
Many of those workers would find employment in other sectors, including nonresidential construction, but the net impact could be enough to take the unemployment rate to 5% by the end of the year, Rosenberg said.
Construction workers make $20.51 an hour, on average, about 20% more than the average worker.
Wieting notes one more impact of the relatively high level of employment in residential construction: Poor productivity.
By definition, if output fell while hours worked increased, then productivity in the industry fell. Wieting estimated that declining productivity in housing shaved a full percentage point off productivity in the entire economy. So instead of growing at about 2% in 2006, underlying productivity probably stayed close to 3%, he argued.
The recent downshift in productivity trends is not deterioration in the economy's long-term growth prospects, but simply a cyclical slowdown rooted in the housing industry.
Rex Nutting is Washington bureau chief of MarketWatch.
Things could get really ugly this year.
(click on the link imbedded in the article to bring up the graph ... it wouldn't copy over)
http://www.marketwatch.com/news/sto...x?guid={102B585B-9CC4-49B5-954B-5706815027D7}
ECONOMIC REPORT
Many layoffs coming in housing, economists say
Data revisions show few construction jobs have been lost... yet
By Rex Nutting, MarketWatch
Last Update: 2:26 PM ET Feb 6, 2007
WASHINGTON (MarketWatch) - The home-building industry collapsed in 2006, but surprisingly few workers lost their jobs, revised government data show. That could change this year, economists said.
Between December 2005 and December 2006, the number of building permits for new homes plunged 23.5%, while spending on residential construction projects fell by 12.4%. But over that time, employment in residential construction fell by just 1.4% from 3.38 million to 3.34 million.
The drop of 47,000 home-building jobs in 2006 is a big change from the 638,000 added in the previous three years, but it's much less than the 100,000 that were reported as lost before the Labor Department released revisions to last year's employment data.
Two economists think construction employment will plunge this year as many of the homes started last year are finished. It typically takes six months for a new home to go from the groundbreaking to the final steps of construction. The latest data show 1.26 million homes were still under construction in December.
"What it means is that we have a steeper cliff to fall off from," wrote David Rosenberg, chief North American economist for Merrill Lynch, in a research note.
The drag from housing will diminish this year, wrote Steven Wieting, an economist for Citigroup, in a research note. But despite his general optimism, Wieting believes the worst is yet to come for jobs.
"We are doubtful, however, the gross job losses tied to the housing cycle are any more than one-third complete," he wrote. He's looking for losses to "easily exceed a half million."
Rosenberg estimates that employment in residential construction will fall about 20% in 2007, or about 600,000 jobs. In essence, the number of jobs in home-building will return to 2002 levels as the pace of home building does.
In addition, of some 3 million manufacturing jobs tied directly to housing, about 10% will disappear, Rosenberg estimated.
All told, that's about 900,000 jobs likely to be lost this year, and it doesn't include a large number of threatened jobs in real estate, mortgage banking and other housing-related fields.
Many of those workers would find employment in other sectors, including nonresidential construction, but the net impact could be enough to take the unemployment rate to 5% by the end of the year, Rosenberg said.
Construction workers make $20.51 an hour, on average, about 20% more than the average worker.
Wieting notes one more impact of the relatively high level of employment in residential construction: Poor productivity.
By definition, if output fell while hours worked increased, then productivity in the industry fell. Wieting estimated that declining productivity in housing shaved a full percentage point off productivity in the entire economy. So instead of growing at about 2% in 2006, underlying productivity probably stayed close to 3%, he argued.
The recent downshift in productivity trends is not deterioration in the economy's long-term growth prospects, but simply a cyclical slowdown rooted in the housing industry.
Rex Nutting is Washington bureau chief of MarketWatch.
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), and trying to post some things that will generate conversation.
