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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Sep 14 2017

Only a Few Industries Are Driving Job Growth

Headline jobs numbers have been pretty solid this year, but looking beneath the surface reveals that job growth has actually been driven by a very narrow group of industries. The retail trade industry provides a particularly stark example.



Indeed, year-over-year (yoy) job growth in retail trade jobs (except those at nonstore retailers) has been slowing since last fall and, after sinking into negative territory, slipped to a seven-year low in August (chart, red line). Meanwhile, yoy job growth for nonstore retailers, which is dominated by web retailers like Amazon, turned up in late 2016 and rose to a 31-month high in June, before ticking down a bit (black line). While these jobs are welcome, this sector accounts for just one in 200 of all private jobs. Since January, other retailers, who account for one in eight of private sector jobs, have lost over 100,000 jobs. Meanwhile, nonstore retailers have added fewer than 20,000 jobs to offset that massive job loss.

Though the retail trade job situation is somewhat extreme, it is representative of what has been happening across industries since last year. In fact, headline job growth has held up due to strength in a group of industries that account for less than 10% of private employment.

In ECRI’s latest report, we highlight precisely which industries are driving job growth and, with the help of our array of various leading indexes, clarify how much longer job growth can continue apace with such narrow support. This will become especially important now that economic growth is about “as good as it gets.”

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