Health-care and consumer-services jobs will lead a slow jobs recovery this year, but overall employment will be kept in check by continued declines in local government and construction jobs, economists say.
Indeed, where the jobs aren’t could be just as important as where they are as the critically important employment picture begins clearing up.
The government on Friday issued a mixed bag of news that shows pockets of strength amid an overall loss of 20,000 positions in the US economy.
“It really comes down to the services-providing sectors to give us job gains,” said Zach Pandl, economist at Nomura Securities in New York. “The question is, when are we going to see a turnaround in service-sector jobs beyond temporary hiring? We think we’re pretty close.”
Service-sector positions-which include everything from retail sales clerks to restaurant workers-traditionally lead the market and are looked to for signs that consumer demand is increasing.
Federal government jobs also are expected to give a boost to the payroll numbers in the next month or two, though some economists expected that Census hiring would push January’s numbers into positive job growth. The government hired about 9,000 Census workers during the month.
By the same token, Census hiring is short-term and likely unable to offset a general trend of losses in the public sector as local and state governments struggle to pay their bills.
“The job creation that we’re going to see from Census workers isn’t something we’re going to be proud of,” said Michael Pento, chief economist at Delta Global Advisors. “It’s not sustainable and it’s not viable. What we need are dramatic tax cuts…to encourage the private sector to hire people.”
Pento is among experts who see bad times ahead for the jobs market that will lead to another leg down in the recession-the double-dip or W-shaped recovery to which some economists refer.
Pockets of hope conflicted with more troubling signs as investors sorted out the report. Markets were down Friday afternoon in choppy trading.
Optimists saw the total jobless rate falling to 9.7 percent and growth among temporary hiring-also a key metric used to determine future job growth-while pessimists looked at sharp declines in construction jobs, continued upswing in long-term unemployment and steep revisions to 2009’s numbers that showed the jobless picture much worse than originally reported.
The Obama administration hung its hat on a slight increase in manufacturing hiring and gains in retail and temp hiring.
“Even as today’s numbers contain signs of the beginning of recovery, they also are a reminder of how far we still have to go to return the economy to robust health and full employment,” Christina Romer, chair of the Council of Economic Advisers, said in a statement.
The White House also said the numbers reflect the importance of the government’s plans to grow jobs through infrastructure stimulus and aid for state and local governments.
But the markets seemed to remain unconvinced that a recovery is on the horizon.
“The government can’t stimulate anything,” Pento said. “It has to be economically viable, sustained and accretive to economic growth. The government has no idea what those jobs are. Only an individual knows what they want to produce and what they want to consume-not some far-off bureaucrat in Washington, D.C.”
There were, to be sure, some fairly clear indicators that the jobs market was improving in some critical areas.
Small businesses lost about 12,000 jobs last month but that was the smallest decline since July 2008, according to numbers released earlier in the week in the ADP National Employment Report. ADP’s numbers have consistently undercounted the government’s report by more than 90,000 in recent months but were almost dead-on for January-the report put the number of job losses at 22,000, just 2,000 more than the Labor Department’s total.
In fact, some analysts suspect that the government’s January numbers may not be correct and subject to further revision in a positive direction.
“A positive reading for January still holds but it will be less positive,” said Kurt Karl, chief economist at Swiss Re. “What we really need is job growth. I think we’re going to get it soon, and it may have happened in January.”
Karl expects financial services to rebound somewhat this year. The group was among the hardest hit when the housing industry collapsed.
But some of those jobs will not return, making a recovery even more difficult.
“Those jobs aren’t coming back, and to posit a vibrant private economy based on job destruction that we’ve experienced I think is extreme,” Bill Gross, co-CIO of bond manager Pimco, said in a CNBC interview earlier Friday.
Outside the service part of the housing industry, construction jobs were among the biggest losers in January, with 75,000 positions getting sucked out of the group.
Any real jobs recovery will be dependent on a housing recovery, said Mike Rubino, CEO at Rubino Financial Group in Troy, Mich.
“In an environment where people aren’t spending money and in an environment where there’s really no good reason to buy real estate except for the fact that you might be changing locations or looking for a job, we really don’t see any strength at all,” Rubino said. “The consumer has basically left the party.”