The housing downturn is taking its toll on the job market as construction employment decreased by 27,000 in January, according to Labor Department data released today.
The government's Bureau of Labor Statistics reports that construction employment fell by 284,000 since its peak in September 2006.
Overall, the U.S. lost 17,000 jobs in January, largely due to the drop in construction and manufacturing jobs.
According to Nigel Gault, chief U.S. economist at research group Global Insight, gains in the services sector were expected to balance out the loss of construction and manufacturing jobs, but that wasn't the case. Government jobs declined and jobs in professional technical services did not increase as much as in previous months.
The unemployment rate held steady, edging down slightly to 4.9 percent from 5.0 percent a month ago.
"Taken at face value, today's employment figures point to recession, but we must treat any one month's payroll numbers with some skepticism," said Gault.
"Whether the economy is just stalled or heading into recession isn't yet clear," said Gault. "We should expect to see more bad news in the labor market--at least through the middle of the year--before the heavy doses of monetary and fiscal stimulus begin to kick in," he concluded.
In other economic news, the Reuters/University of Michigan Surveys of Consumers reports that although there was a recent small increase in consumer sentiment, confidence remains significantly below last January's level, declining by one-fifth during the past 12 months. The Reuters/University of Michigan reports are based on monthly surveys of consumer attitudes and expectations about the U.S. economy.
The Index of Consumer Sentiment was 78.4 in the January 2008 survey, above the 75.5 reported in December 2007, but well below the 96.9 recorded in January 2007.
According to a Reuters/University of Michigan press release, the risk of recession remains "uncomfortable high."