Monthly Labor Review March 2006 17

Payroll Survey Developments

Nonfarm payroll employment, as measured by the Current EmploymentStatistics (CES) survey, continued to

grow at a modest pace in 2005, increasing by

nearly 2.0 million.1 With this growth, employment recovered to its prerecession peak by February and then entered a period of expansion.

(See chart 1.)

Employment growth was widespread, with

most industries adding jobs. (See table 1.) A

sustained period of historically low interest

rates continued to boost demand for housing

and remodeling throughout 2005 and supported

ongoing hiring in construction and housing-dependent industries within financial activities

and retail trade. Similarly, improved consumer

confidence through most of the year helped spur

employment growth in retail trade, as well as in

leisure and hospitality industries. The effects of

surging energy prices proved to be twofold,

with mining experiencing unusually strong job

gains, but many other industries seeing dampened hiring. Despite rising output, manufacturing was one of the three major industries

not to add jobs in 2005. (The other two were

information and other services.) The increased

output, however, did help boost hiring in other

industries, such as wholesale trade and trucking. Steady growth in State and local government revenues helped lift employment in the public

sector.

The job openings rate, as measured by the Job

Openings and Labor Turnover Survey (JOLTS),2

 began to climb in June, continuing the general upward trend started in September 2003, but still remained slightly below its prerecessionary peak.

(See chart 2.) CES payroll employment measures net

employment changes from month to month, whereas the hires and separations measures capture the

underlying monthly employment movements. The

hires and separations rates, also measured by JOLTS,

remained relatively flat throughout 2005.

Interest-rate-sensitive industries

Long-term interest rates, though inching upward in

2005, remained at historically low levels. (See chart

3.) The low levels helped spur job growth in components of construction, financial activities, and

retail trade. Although anecdotal evidence suggested

a weakening in the housing market late in the year,

hiring held steady in construction and financial activities, while retail employment remained relatively flat after July.3

Construction added 295,000 jobs over the year,

despite some worries of housing price bubbles in

certain regions of the country.4 Nationally, home

prices increased by 13.0 percent from the fourth

Payroll employment in 2005:

recovery and expansion

Employment grew by more than 2 million in 2005,

reaching and then surpassing its prerecession peak;

a strong housing market spurred hiring in construction

and in finance and retail trade, while increased

manufacturing production translated into more jobs

in trucking, warehousing, and wholesale trade

Robert P. Stephens,

David Langdon,

and

Brady M. Stephens

Robert P. Stephens

and Brady M.

Stephens are

economists in the

Office of

Employment and

Unemployment

Statistics, Bureau of

Labor Statistics.

David Langdon is an

economist formerly

in the BLS office of

Employment and

Unemployment

Statistics and

currently in the

Office of the

Assistant Secretary

for Policy, U.S.

Department of

Labor. E-mail:

stephens.robert@bls.gov
18 Monthly Labor Review March 2006

Payroll Survey Developments

quarter of 2004 through the fourth quarter of 2005.5 This fastpaced growth was likely strengthened by low mortgage rates

and by an apparent increase in speculative home buying in

regions of the country that had seen the most rapid housing

appreciation.6 The Mountain, Pacific, and South Atlantic regions saw housing appreciate more than 17 percent between

the fourth quarter of 2004 and the fourth quarter of 2005,

while housing in certain metropolitan statistical areas within

these regions appreciated more than 30 percent during the

same period. In spite of worries about inflation, construction

indicators remained fairly strong in 2005, with the number of

privately owned housing units authorized by building permits remaining above 2004 levels throughout most of the year.

In addition, the ratio of housing starts to completions remained above 1.0 in most of 2005, indicating that new home

starts continued to outpace completions and thus increased

demand for construction workers.7

Specialty trade contracting was the main source of strength

in construction, accounting for 62.5 percent of jobs added in

2005. Specialty trade contractors are involved in specific activities related to construction projects, but are not responsible for

the project as a whole. Building foundation and exterior contractors, such as framing, masonry, or roofing contractors; building

equipment contractors, such as electrical, plumbing, and heating, ventilation, and air-conditioning contractors; and building

finishing contractors, such as drywall, insulation, and flooring contractors, are all classified into this industry. Much of

the work done by specialty trade contractors is contracted

through builders and performed at the construction site. Following a relatively mild downturn in 2001–02, the specialty

trades industry has seen consistent, solid growth.

The continued low long-term interest rates and healthy

housing market led to job gains in other industries also. The

credit intermediation industry, which is involved with lending funds or facilitating lending, hired more workers as demand for lending increased. Both depository and nondepository credit intermediation saw growth in 2005. Within

depository credit intermediation, commercial banking added

21,300 jobs, while real estate credit accounted for much of the

hiring strength in nondepository credit intermediation. The

real estate industry also benefited as the increasing volume

of new and existing home sales helped spark a gain of 50,400

jobs.8

Building material and garden supply stores have benefited

doubly from the healthy housing market. These stores supply

not only the increasing ranks of homeowners, but many building and specialty trade contractors as well. Furthermore,

much mortgage activity has been in the refinancing area, with

cash-outs that often help consumers afford home improvements. As a result, building material and garden supply stores

129,000

130,000

131,000

132,000

133,000

134,000

135,000

129,000

130,000

131,000

132,000

133,000

134,000

135,000

Chart 1. Total nonfarm employment, seasonally adjusted, 2000—05

NOTE: Shaded area represents NBER-designated recession.

Thousands Thousands

January

2000

July

2000

January

2001

July

2001

January

2002

July

2002

January

2003

January

2004

July

2003

July

2004

January

2005

July

2005
Monthly Labor Review March 2006 19

 Table 1. Employees on nonfarm payrolls, by industry, seasonally adjusted, 2000—05

 [Numbers in thousands]

 Average change, December to December

 Industry 2000—03 2003—04 2004—05

2000 2003 2004 2005 Thousands Percent Thousands Percent Thousands Percent

 Total nonfarm ...................... 132,484 130,298 132,395 134,376 –729 –0.6 2,097 1.6 1,981 1.5

 Total private ............................ 111,680 108,743 110,679 112,498 –979 –.9 1,936 1.8 1,819 1.6

 Goods-producing ........................ 24,575 21,682 22,016 22,282 –964 –4.1 334 1.5 266 1.2

Natural resources and mining ............... 602 575 601 644 –9 –1.5 26 4.5 43 7.2

 Logging ........................................ 75.3 68.4 66.9 62.0 –2.3 –3.2 –1.5 –2.2 –4.9 –7.3

 Mining ................................................ 526.3 506.5 534.0 582.1 –6.6 –1.3 27.5 5.4 48.1 9.0

 Oil and gas extraction ...................... 122.9 118.2 124.7 128.7 –1.6 –1.3 6.5 5.5 4.0 3.2

 Mining, except oil and gas ............... 220.7 202.3 206.4 214.3 –6.1 –2.9 4.1 2.0 7.9 3.8

 Coal mining ................................. 70.9 68.8 71.0 75.4 –.7 –1.0 2.2 3.2 4.4 6.2

 Support activities for mining ............ 182.7 186.0 202.9 239.1 1.1 .6 16.9 9.1 36.2 17.8

Construction .......................................... 6,792 6,811 7,121 7,416 6 .1 310 4.6 295 4.1

 Construction of buildings ................. 1,604.3 1,584.7 1,669.7 1,727.2 –6.5 –.4 85.0 5.4 57.5 3.4

 Residential building ..................... 797.2 862.7 928.1 966.8 21.8 2.7 65.4 7.6 38.7 4.2

 Nonresidential building ................ 807.1 722.0 741.6 760.4 –28.4 –3.6 19.6 2.7 18.8 2.5

 Heavy and civil engineering

construction ................................ 943.7 902.7 921.2 974.8 –13.7 –1.5 18.5 2.0 53.6 5.8

 Specialty trade contractors .............. 4,243.7 4,323.3 4,529.8 4,714.3 26.5 .6 206.5 4.8 184.5 4.1

 Residential specialty trade

contractors .............................. – 2,031.5 2,190.5 2,347.3 – – 159.0 7.8 156.8 7.2

 Nonresidential specialty

trade contractors ..................... – 2,291.8 2,339.3 2,367.0 – – 47.5 2.1 27.7 1.2

Manufacturing ........................................ 17,181 14,296 14,294 14,222 –962 –5.9 –2 .0 –72 –.5

 Durable goods ................................... 10,860 8,854 8,956 8,970 –669 –6.6 102 1.2 14 .2

 Wood products ................................. 593.9 540.6 557.2 558.9 –17.8 –3.1 16.6 3.1 1.7 .3

 Nonmetallic mineral products .......... 553.8 491.9 507.7 500.7 –20.6 –3.9 15.8 3.2 –7.0 –1.4

 Primary metals ................................ 611.1 465.9 467.1 469.4 –48.4 –8.6 1.2 .3 2.3 .5

 Fabricated metal products ............... 1,761.9 1,472.5 1,511.3 1,526.7 96.5 –5.8 38.8 2.6 15.4 1.0

 Machinery ........................................ 1,453.3 1,131.6 1,149.7 1,166.9 –107.2 –8.0 18.1 1.6 17.2 1.5

 Computer and electronic

products ...................................... 1,864.4 1,319.8 1,316.8 1,322.2 –181.5 –10.9 –3.0 –.2 5.4 .4

 Computer and peripheral

equipment ............................... 303.1 214.0 205.1 205.7 –29.7 –11.0 –8.9 –4.2 .6 .3

 Communications equipment ....... 255.7 148.3 148.2 149.2 –35.8 –16.6 –.1 –.1 1.0 .7

 Semiconductors and electronic

components ............................. 710.4 449.5 451.2 451.0 –87.0 –14.1 1.7 .4 –.2 .0

 Electronic instruments ................. 480.0 426.5 434.8 441.7 –17.8 –3.9 8.3 1.9 6.9 1.6

 Electrical equipment and

appliances ................................... 587.4 450.1 441.8 434.4 –45.8 –8.5 –8.3 –1.8 –7.4 –1.7

 Transportation equipment ................ 2,022.2 1,759.5 1,776.3 1,776.7 –87.6 –4.5 16.8 1.0 .4 .0

 Motor vehicles and parts ............. 1,286.1 1,116.2 1,111.7 1,092.1 –56.6 –4.6 –4.5 –.4 –19.6 –1.8

 Furniture and related products ........ 676.8 568.7 572.5 558.0 –36.0 –5.6 3.8 .7 –14.5 –2.5

 Miscellaneous manufacturing .......... 734.9 653.3 655.3 655.8 –27.2 –3.8 2.0 .3 .5 .1

 Nondurable goods ............................. 6,321 5,442 5,338 5,252 –293 –4.9 –104 –1.9 –86 –1.6

 Food manufacturing ......................... 1,554.0 1,506.9 1,486.6 1,466.0 –15.7 –1.0 –20.3 –1.3 –20.6 –1.4

 Beverages and tobacco

products ...................................... 209.1 196.1 193.3 192.3 –4.3 –2.1 –2.8 –1.4 –1.0 –.5

 Textile mills ...................................... 367.5 243.6 229.5 209.0 –41.3 –12.8 –14.1 –5.8 –20.5 –8.9

 Textile product mills ......................... 215.0 173.7 173.0 173.9 –13.8 –6.9 –.7 –.4 .9 .5

 Apparel ............................................ 472.6 296.5 273.5 253.5 –58.7 –14.4 –23.0 –7.8 –20.0 –7.3

 Leather and allied products ............. 64.5 42.6 40.4 39.7 –7.3 –12.9 –2.2 –5.2 –.7 –1.7

 Paper and paper products ............... 599.8 504.1 489.7 478.1 –31.9 –5.6 –14.4 –2.9 –11.6 –2.4

 Printing and related support

activities ...................................... 801.2 671.3 655.0 644.0 –43.3 –5.7 –16.3 –2.4 –11.0 –1.7

 Petroleum and coal products .......... 121.9 111.5 111.4 112.3 –3.5 –2.9 –.1 –.1 .9 .8

 Chemicals ........................................ 975.3 891.2 881.1 884.0 –28.0 –3.0 –10.1 –1.1 2.9 .3

 Plastics and rubber products .......... 940.2 804.9 804.6 798.9 –45.1 –5.0 –.3 .0 –5.7 –.7

December DecemberDecember December
20 Monthly Labor Review March 2006

Payroll Survey Developments

 Service-providing .............................. 107,909 108,616 110,379 112,094 236 .2 1,763 1.6 1,715 1.6

 Private service-providing ........... 87,105 87,061 88,663 90,216 –15 .0 1,602 1.8 1,553 1.8

Trade, transportation, and utilities ......... 26,339 25,295 25,695 26,015 –348 –1.3 400 1.6 320 1.2

Wholesale trade ................................. 5,883.8 5,605.9 5,702.5 5,783.8 –92.6 –1.6 96.6 1.7 81.3 1.4

Durable goods .................................... 3,213.8 2,926.0 2,966.6 3,017.6 –95.9 –3.1 40.6 1.4 51.0 1.7

Nondurable goods .............................. 2,057.7 1,999.1 2,018.4 2,023.9 –19.5 –1.0 19.3 1.0 5.5 .3

 Electronic markets and agents

and brokers ................................. 612.3 680.8 717.5 742.3 22.8 3.6 36.7 5.4 24.8 3.5

 Retail trade ........................................ 15,379.9 14,930.0 15,139.1 15,300.3 –150.0 –1.0 209.1 1.4 161.2 1.1

 Motor vehicle and parts dealers ...... 1,856.6 1,892.9 1,906.0 1,914.7 12.1 .6 13.1 .7 8.7 .5

 Automobile dealers ...................... 1,222.0 1,258.4 1,254.7 1,252.4 12.1 1.0 –3.7 –.3 –2.3 –.2

 Furniture and home furnishings

stores .......................................... 546.3 557.4 570.0 583.0 3.7 .7 12.6 2.3 13.0 2.3

Electronics and appliance stores ..... 564.3 510.6 520.5 540.5 –17.9 –3.3 9.9 1.9 20.0 3.8

Building material and garden

supply stores ............................... 1,146.8 1,198.9 1,249.6 1,290.9 17.4 1.5 50.7 4.2 41.3 3.3

 Food and beverage stores ............... 2,979.1 2,814.3 2,810.4 2,805.9 –54.9 –1.9 –3.9 –.1 –4.5 –.2

 Health and personal care stores ..... 947.2 940.7 945.4 966.1 –2.2 –.2 4.7 .5 20.7 2.2

 Gasoline stations ............................. 929.8 878.0 868.1 869.6 –17.3 –1.9 –9.9 –1.1 1.5 .2

 Clothing and clothing accessories

stores .......................................... 1,328.0 1,321.8 1,386.1 1,448.1 –2.1 –.2 64.3 4.9 62.0 4.5

 Sporting goods, hobby, book,

and music stores ........................ 711.8 637.5 641.7 640.0 –24.8 –3.6 4.2 .7 –1.7 –.3

 General merchandise stores ........... 2,864.1 2,836.7 2,903.4 2,906.9 –9.1 –.3 66.7 2.4 3.5 .1

 Department stores ....................... 1,771.5 1,611.4 1,605.6 1,595.6 –53.4 –3.1 –5.8 –.4 –10.0 –.6

 Miscellaneous store retailers .......... 1,010.7 917.6 907.1 899.0 –31.0 –3.2 –10.5 –1.1 –8.1 –.9

 Nonstore retailers ............................ 495.2 423.6 430.8 435.6 –23.9 –5.1 7.2 1.7 4.8 1.1

 Transportation and warehousing ....... 4,473.9 4,187.9 4,298.3 4,371.6 –95.3 –2.2 110.4 2.6 73.3 1.7

 Air transportation ............................. 628.3 517.7 511.0 486.9 –36.9 –6.3 –6.7 –1.3 –24.1 –4.7

 Rail transportation ........................... 230.2 221.4 227.6 227.3 –2.9 –1.3 6.2 2.8 –.3 –.1

 Water transportation ........................ 55.7 55.4 56.8 63.7 –.1 –.2 1.4 2.5 6.9 12.1

 Truck transportation ......................... 1,405.6 1,334.4 1,368.9 1,404.0 –23.7 –1.7 34.5 2.6 35.1 2.6

 Transit and ground passenger

 transportation ............................. 373.0 386.4 389.0 392.2 4.5 1.2 2.6 .7 3.2 .8

 Pipeline transportation .................... 46.1 39.1 37.1 37.0 –2.3 –5.3 –2.0 –5.1 –.1 –.3

Scenic and sightseeing

transportation .......................... 28.9 25.7 28.0 31.1 –1.1 –3.8 2.3 8.9 3.1 11.1

 Support activities for

transportation .............................. 546.3 521.7 546.3 556.2 –8.2 –1.5 24.6 4.7 9.9 1.8

 Couriers and messengers ............... 635.1 553.8 561.2 579.7 –27.1 –4.5 7.4 1.3 18.5 3.3

 Warehousing and storage ............... 524.7 532.3 572.4 593.5 2.5 .5 40.1 7.5 21.1 3.7

 Utilities ............................................... 601.3 570.7 555.1 559.7 –10.2 –1.7 –15.6 –2.7 4.6 .8

Information ............................................. 3,706 3,152 3,080 3,066 –185 –5.3 –72 –2.3 –14 –.5

 Publishing industries, except

Internet ........................................ 1,044.7 914.3 903.8 902.5 –43.5 –4.3 –10.5 –1.1 –1.3 –.1

 Motion picture and sound

recording industries .................... 378.2 385.9 376.5 387.7 2.6 .7 –9.4 –2.4 11.2 3.0

Broadcasting, except Internet .......... 345.1 321.9 326.4 325.1 –7.7 –2.3 4.5 1.4 –1.3 –.4

Internet publishing and

broadcasting ............................... 51.1 28.4 30.7 30.4 –7.6 –17.8 2.3 8.1 –.3 –1.0

 Telecommunications ........................ 1,325.5 1,061.2 1,011.9 993.3 –88.1 –7.1 –49.3 –4.6 –18.6 –1.8

 ISPs, search portals, and data

processing .................................. 514.5 390.1 379.8 377.8 –41.5 –8.8 –10.3 –2.6 –2.0 –.5

 Other information services .............. 46.9 49.9 50.5 49.6 1.0 2.1 .6 1.2 –.9 –1.8

Financial activities ................................. 7,742 7,982 8,076 8,223 80 1.0 94 1.2 147 1.8

 Finance and insurance ...................... 5,713.5 5,918.6 5,973.1 6,068.2 68.4 1.2 54.5 .9 95.1 1.6

 Monetary authorities—central

bank ............................................ 22.8 22.4 20.9 21.0 –.1 –.6 –1.5 –6.7 .1 .5

 Credit intermediation and

related activities .......................... 2,545.9 2,800.7 2,834.4 2,894.2 84.9 3.2 33.7 1.2 59.8 2.1

 Table 1. Continued—Employees on nonfarm payrolls, by industry, seasonally adjusted, 2000—05

 Average change, December to December

 Industry 2000—03 2003—04 2004—05

2000 2003 2004 2005 Thousands Percent Thousands Percent Thousands Percent

[Numbers in thousands]

December December December December
Monthly Labor Review March 2006 21

 Depository credit

 intermediation ................... 1,678.0 1,748.9 1,754.0 1,793.2 23.6 1.4 5.1 .3 39.2 2.2

 Commercial banking .......... 1,241.6 1,276.5 1,284.7 1,306.0 11.6 .9 8.2 .6 21.3 1.7

 Securities, commodity

contracts, investments ........... 837.1 754.7 777.7 790.4 –27.5 –3.4 23.0 3.0 12.7 1.6

 Insurance carriers and related

activities ................................. 2,221.6 2,254.6 2,254.4 2,274.8 11.0 .5 –.2 .0 20.4 .9

 Funds, trusts, and other

financial vehicles ................... 86.1 86.2 85.7 87.8 .0 .0 –.5 –.6 2.1 2.5

 Real estate and rental and

leasing ....................................... 2,028.7 2,063.6 2,102.6 2,154.5 11.6 .6 39.0 1.9 51.9 2.5

 Real estate ................................. 1,328.3 1,393.0 1,431.2 1,481.6 21.6 1.6 38.2 2.7 50.4 3.5

 Rental and leasing services ....... 671.7 643.5 645.6 645.0 –9.4 –1.4 2.1 0.3 –.6 –.1

 Lessors of nonfinancial

 intangible assets ................... 28.7 27.1 25.8 27.9 –.5 –1.9 –1.3 –4.8 2.1 8.1

 Professional and business

services ......................................... 16,833 16,146 16,630 17,121 –229 –1.4 484 3.0 491 3.0

 Professional and technical

services ..................................... 6,903.0 6,667.0 6,902.2 7,118.9 –78.7 –1.2 235.2 3.5 216.7 3.1

 Legal services ........................ 1,071.3 1,154.0 1,167.9 1,160.8 27.6 2.5 13.9 1.2 –7.1 –.6

 Accounting and bookkeeping

services .............................. 879.7 808.3 821.8 859.0 –23.8 –2.8 13.5 1.7 37.2 4.5

 Architectural and engineering

services .............................. 1,265.3 1,231.9 1,281.3 1,335.6 –11.1 –.9 49.4 4.0 54.3 4.2

 Computer systems design

and related services ........... 1,315.8 1,122.0 1,177.2 1,212.1 –64.6 –5.2 55.2 4.9 34.9 3.0

 Management and technical

consulting services ............ 740.7 761.6 816.5 865.4 7.0 .9 54.9 7.2 48.9 6.0

 Management of companies

and enterprises ......................... 1,809.2 1,701.4 1,741.7 1,756.7 –35.9 –2.0 40.3 2.4 15.0 .9

 Administrative and waste

services ..................................... 8,120.7 7,777.2 7,986.4 8,245.1 –114.5 –1.4 209.2 2.7 258.7 3.2

 Administrative and support

services .................................. 7,805.2 7,453.8 7,652.7 7,911.0 –117.1 –1.5 198.9 2.7 258.3 3.4

 Employment services ............. 3,775.2 3,378.2 3,484.0 3,671.0 –132.3 –3.6 105.8 3.1 187.0 5.4

 Temporary help services .... 2,587.8 2,311.0 2,461.1 2,628.1 –92.3 –3.7 150.1 6.5 167.0 6.8

 Business support services ..... 785.3 753.3 765.8 751.8 –10.7 –1.4 12.5 1.7 –14.0 –1.8

 Services to buildings

and dwellings ..................... 1,584.0 1,655.0 1,703.0 1,751.1 23.7 1.5 48.0 2.9 48.1 2.8

 Waste management and

remediation services ............. 315.5 323.4 333.7 334.1 2.6 .8 10.3 3.2 .4 .1

 Education and health services ........ 15,313 16,749 17,141 17,507 479 3.0 392 2.3 366 2.1

 Educational services .................... 2,440.1 2,738.4 2,800.5 2,827.5 99.4 3.9 62.1 2.3 27.0 1.0

 Healthcare and social

assistance ................................. 12,872.7 14,010.4 14,340.3 14,679.6 379.2 2.9 329.9 2.4 339.3 2.4

 Healthcare .................................... 10,976.0 11,919.0 12,169.3 12,435.8 314.3 2.8 250.3 2.1 266.5 2.2

 Ambulatory healthcare

services ..................................... 4,370.9 4,853.4 5,031.1 5,181.4 160.8 3.6 177.7 3.7 150.3 3.0

Offices of physicians ............... 1,870.3 2,024.7 2,069.1 2,135.8 51.5 2.7 44.4 2.2 66.7 3.2

Outpatient care centers ........... 391.8 433.6 460.2 484.1 13.9 3.4 26.6 6.1 23.9 5.2

Home healthcare services ...... 626.5 753.0 800.1 822.1 42.2 6.3 47.1 6.3 22.0 2.7

Hospitals ..................................... 3,986.4 4,266.7 4,302.3 4,382.5 93.4 2.3 35.6 .8 80.2 1.9

Nursing and residential care

facilities .................................. 2,618.7 2,798.9 2,835.9 2,871.9 60.1 2.2 37.0 1.3 36.0 1.3

 Nursing care facilities ............. 1,524.9 1,575.8 1,578.2 1,582.5 17.0 1.1 2.4 .2 4.3 .3

 Social assistance ........................ 1,896.7 2,091.4 2,171.0 2,243.8 64.9 3.3 79.6 3.8 72.8 3.4

 Child daycare services ........... 701.4 754.2 774.1 793.3 17.6 2.4 19.9 2.6 19.2 2.5

 Leisure and hospitality ..................... 11,976 12,335 12,643 12,898 120 1.0 308 2.5 255 2.0

 Arts, entertainment, and

recreation .................................. 1,790.4 1,831.4 1,856.2 1,905.9 13.7 .8 24.8 1.4 49.7 2.7

 Table 1. Continued—Employees on nonfarm payrolls, by industry, seasonally adjusted, 2000—05

 [Numbers in thousands]

 Average change, December to December

 Industry 2000—03 2003—04 2004—05

2000 2003 2004 2005 Thousands Percent Thousands Percent Thousands Percent

December December December December
22 Monthly Labor Review March 2006

Payroll Survey Developments

added 41,300 jobs in 2005.

Improved consumer confidence

After rallying in 2004, consumer confidence continued to inch

up throughout most of 2005. This pattern was broken temporarily in the aftermath of Hurricane Katrina (see box, this

page): “Coupled with soaring gasoline prices and a less optimistic job outlook, Hurricane Katrina pushed consumer confidence to its lowest level [85.2 in October 2005] in nearly

two years, creating a degree of uncertainty and concern about

the short-term future”;9 however, by the end of 2005, consumer

confidence had recovered from this shock and had returned to

its prehurricane level of 103.8 percent in December.10

Increasing consumer confidence led to more spending11

and helped retail trade add 161,200 jobs to payrolls in 2005.

Although this increase is about 20 percent less than the

209,100 jobs gained in 2004, it represents a marked improvement over the 3-year period between 2001 and 2003, which

saw retail trade shed an average of 150,000 jobs annually.

Within retail trade, electronics and appliance stores had

one of the fastest job growth rates, expanding by 3.8 percent.

This component also saw the most improvement from 2004,

when employment rose 1.9 percent. A shift toward higher

cost consumer electronics helped increase sales for many

electronics retailers in 2005.12 Also adding jobs in 2005 were

clothing and clothing accessories stores, in which employKatrina

Hurricane Katrina made landfall on the Gulf Coast on August

29, 2005, and damaged parts of coastal Louisiana, Mississippi, and

Alabama heavily. All possible efforts were made to contact survey

respondents in the hurricane-affected areas. Because of the large-scale,

long-term evacuations of New Orleans and surrounding areas, the

Current Employment Statistics program modified its estimation

methodology to measure employment more accurately in the affected

areas in September and October. (The modifications were detailed in

The Employment Situation press releases for those months and in a

fact sheet posted on the program’s homepage, http://www.bls.gov/

katrina/cpscesquestions.htm.) In November, the program returned to its standard methodology. For the Job Openings and

Labor Turnover Survey, special estimation procedures were used

for select nonresponding sample units in August. (These procedures

were detailed in the Job Openings and Labor Turnover news release

for August 2005.)

Performing arts and spectator

sports ................................... 373.7 371.4 366.8 362.1 –.8 –.2 –4.6 –1.2 –4.7 –1.3

Museums, historical sites,

zoos, and parks ................... 112.9 115.2 118.2 121.6 .8 .7 3.0 2.6 3.4 2.9

Amusements, gambling,

 and recreation ..................... 1,303.8 1,344.8 1,371.2 1,422.2 13.7 1.0 26.4 2.0 51.0 3.7

 Accommodations and food

services ................................... 10,185.7 10,503.8 10,786.9 10,992.3 106.0 1.0 283.1 2.7 205.4 1.9

 Accommodations ...................... 1,902.5 1,786.9 1,809.8 1,809.2 –38.5 – 2.1 22.9 1.3 –.6 .0

 Food services and drinking

places ................................... 8,283.2 8,716.9 8,977.1 9,183.1 144.6 1.7 260.2 3.0 206.0 2.3

Other services ................................ 5,196 5,402 5,398 5,386 69 1.3 –4 –.1 –12 –.2

 Repair and maintenance .......... 1,251.1 1,224.9 1,233.7 1,241.4 –8.7 –.7 8.8 .7 7.7 .6

 Personal and laundry services . 1,257.6 1,266.2 1,275.0 1,270.3 2.9 .2 8.8 .7 –4.7 –.4

 Membership associations

and organizations ................ 2,687.1 2,910.7 2,888.8 2,874.5 74.5 2.7 –21.9 –.8 –14.3 –.5

Government .................................... 20,804 21,555 21,716 21,878 250 1.2 161 .7 162 .7

 Federal ........................................ 2,745 2,734 2,726 2,713 –4 –.1 –8 –.3 –13 –.5

 Federal, except U.S. Postal

Service ................................. 1,866.0 1,941.3 1,949.0 1,941.2 25.1 1.3 7.7 .4 –7.8 –.4

 U.S. Postal Service ................... 878.6 792.7 776.6 772.1 –28.6 –3.4 –16.1 –2.0 –4.5 –.6

 State government ....................... 4,814 4,984 5,010 5,036 57 1.2 26 .5 26 .5

 State government education .... 2,039.5 2,252.4 2,248.2 2,258.1 71.0 3.4 –4.2 –.2 9.9 .4

 State government, excluding

education ............................. 2,774.3 2,731.7 2,761.4 2,777.4 –14.2 –.5 29.7 1.1 16.0 .6

 Local government ....................... 13,245 13,837 13,980 14,129 197 1.5 143 1.0 149 1.1

 Local government education .... 7,359.7 7,712.4 7,812.9 7,906.9 117.6 1.6 100.5 1.3 94.0 1.2

 Local government, excluding

education ............................. 5,885.0 6,124.8 6,166.9 6,222.2 79.9 1.3 42.1 .7 55.3 .9

NOTE: Consistent with other CES publications, employment data are rounded to thousands for supersectors and selected aggregate industries and

to hundreds for more detailed industries. Dash indicates data not available.

 Table 1. Continued—Employees on nonfarm payrolls, by industry, seasonally adjusted, 2000—05

 [Numbers in thousands]

 Average change, December to December

 Industry 2000—03 2003—04 2004—05

2000 2003 2004 2005 Thousands Percent Thousands Percent Thousands Percent

December December December December
Monthly Labor Review March 2006 23

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Chart 2. Total nonfarm job openings, hires, and total separations rates, seasonally adjusted, 2001—05

NOTE: Shaded area represents NBER-designated recession.

Percent Percent

January

2001

July

2001

January

2002

July

2002

January

2003

January

2004

July

2003

July

2004

January

2005

July

2005

Job openings rate

Total separations rate

Hires rate

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Chart 3. Thirty year fixed-rate mortgage, 1992—2005

NOTE: Shaded area represents NBER-designated recession.

Percent Percent

SOURCE: HSH Associates, financial publishers.

-
24 Monthly Labor Review March 2006

Payroll Survey Developments

ment increased by 62,000. The 2005 gain is only slightly less

than the 64,300 jobs added in 2004 and is still much improved over the relative flatness experienced throughout the

early 2000s.

Not all of retail trade experienced large gains, however.

General merchandise stores saw employment change little in

2005, with most of the weakness occurring within traditional

department stores. This industry, whose establishments are

distinguished from discount department stores largely by the

latter’s centralized customer checkout and cash register facilities, has seen steady job declines since employment

reached a high point in 2001. Offsetting the weakness in traditional department stores were discount stores, warehouse

clubs, and supercenters, which continued to add jobs in 2005.

Employment in automobile dealerships edged downward

in 2005 as employee price discount programs and other dealership sales tactics failed to translate into permanent hiring.

Although these tactics boosted sales significantly through the

first half of the year, by the end of 2005 sales at automobile

and other motor vehicle dealers had fallen back to near 2004

levels.13 Similarly, dealerships saw employment trend upward

during the first half of the year, but by year’s end those gains

had been erased.

Also benefiting from the strengthened consumer confidence and spending was the leisure and hospitality industry, which added 255,000 jobs to payrolls in 2005. After

edging up in 2004, the arts, entertainment, and recreation

industry added 49,700 jobs to payrolls in 2005. Most of this

increase came from the amusement, gambling, and recreation

components. Food services and drinking places, which make

up the majority of employment within leisure and hospitality, grew at a somewhat slower pace compared with the previous year’s growth, but still managed to add 206,000 jobs in

2005. Both full-service restaurants and limited-service eating places experienced solid job growth as sales continued

to climb.14

Rising oil and gas prices

Oil and gas prices jumped in 2005, spurred on by increasing

worldwide demand15 and shortages worsened by an active

hurricane season in the Gulf of Mexico. Despite retreating

from hurricane-induced record highs late in the year, prices

remained well above 2004 levels. (See chart 4.) Many industries likely saw their 2005 growth dampened as high energy

prices increased operating costs and cut into consumers’ budgets. Wal-Mart, for example, blamed soaring gasoline prices

for weaker-than-expected (though still substantial) sales.16

These indirect effects of high fuel prices on employment,

while likely, are difficult to gauge.

Airlines have been struggling with a variety of market

forces since 2001. Air transportation was hit hard by the high

fuel prices. (See chart 5.) In 2005, jet fuel prices increased

about 50 percent, while employment declined by about 5 percent. Carriers have been unable to pass the high and still rising jet fuel costs onto their passengers because of intense

competition.17 As a result, airlines have lowered their labor

costs, another major expense, by downsizing. After a brief

period of relative stability in 2004, employment in air transportation once again began declining in 2005. Over the year,

the industry shed 24,100 jobs, making it one of the few industries within transportation and warehousing to lose jobs

in 2005.

While some industries were hurt by the sustained high oil

and gas prices, others benefited from them. One of the latter

was mining, whose employment grew at an annual rate of 9.0

percent, the industry’s fastest rate of growth since 1981. Mining added 48,100 jobs to payrolls in 2005, swelling its ranks

to more than 580,000 workers, a level last seen by the industry in March 1994.

Much of the growth within mining came from support activities for oil and gas operations, which provide services on

a contract or fee basis. Support activities for oil and gas accounted for 39.5 percent of the job growth within mining. A

14.1-percent employment growth rate made support activities one of the fastest-growing industries in the Nation during 2005.

Hiring in heavy and civil engineering construction also

may have resulted in part from high oil prices and recovery

from an active hurricane season. More generally, the increased hiring is attributable to expansion of the U.S. energy

and communication infrastructure. Heavy construction,

which had experienced little employment growth since the

1990s, saw a marked improvement in 2005. The industry

added 53,600 jobs, a 5.8-percent increase over the previous

year, and fully recovered to its prerecessionary employment

level. (See chart 6.) Oil and gas pipeline construction accounted for 6,600 additional jobs, while power and communication systems accounted for 18,500.

Also benefiting from high oil and gas prices in 2005 was

petroleum and coal products manufacturing, an industry

dominated by petroleum refining. The industry saw employment creep up slightly in 2005, in contrast to the 86,000 jobs

lost in nondurable goods manufacturing as a whole. Corresponding to these employment gains has been a steady increase in petroleum manufacturing’s productive capacity

since 2004. Again, this trend contrasts with that exhibited by

the rest of nondurable goods manufacturing, which has seen

its productive capacity decline in recent years.18

Manufacturing output and employment

Manufacturing is the stereotypical cyclical industry, with

output expanding and contracting in concert with the busi-
Monthly Labor Review March 2006 25

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

10

20

30

40

50

60

70

10

20

30

40

50

60

70

Chart 4. West Texas intermediate crude oil, spot prices, 1986—2005

NOTE: Shaded areas represent NBER-designated recessions.

Dollars

per barrel

SOURCE: Energy Information Administration.

Dollars 

per barrel

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Chart 5. Over-the-year percent change in air transportation employment, seasonally adjusted, and 

 in U.S. Gulf Coast kerosene-type jet fuel spot prices, 1992—2005

NOTE: Shaded area represents NBER-designated recession.

Employment

SOURCE: Bureau of Labor Statistics and Energy Information Administration.

Fuel price

–100

–150

–50

 0

 100

 50

 150

–10

–15

 0

 –5 

 10

 15

 5 

Fuel price

Employment
26 Monthly Labor Review March 2006

Payroll Survey Developments

ness cycle. Since the end of the 2001 recession, U.S. factories

have ratcheted up production by nearly 12 percent.19 Employment, however, has proven to be less resilient (see chart 7),

with periods of rapid contraction followed by periods that

only loosely can be considered recoveries. After the 2001

recession, manufacturing payrolls continued shrinking until

entering a nominal recovery during part of 2004. The recovery

faltered in 2005 as 72,000 jobs fell from factory payrolls.

With an employment decline of 86,000, nondurable goods

more than accounted for the manufacturing job losses in

2005. Employment in the industry has been falling precipitously since 1994, after remaining flat over the previous

three decades. Nonetheless, nondurable goods industries continued expanding their productive capacity throughout the

1990s.20 In recent years, that expansion has ended, and some

of those industries have reduced their productive capacity.

Textile mills have shed 22 percent of their productive capacity from a 1999 peak. During the same period, apparel makers have cut about half of their capacity. Employment in these

industries shrank by 40,500 in 2005 alone. Paper and printing industries also have decreased their capacity and jobs,

with net layoffs totaling 22,600 in 2005. The textile product

mills industry presents an interesting exception: although its

productive capacity edged down for the sixth consecutive

year, both output and employment edged up in 2005. Factories in the industry transform purchased textiles into goods

such as curtains, sheets, and carpets (that is, into nonapparel

textile products).

Durable goods manufacturers had a more even mix of

positives and negatives. The aforementioned expansion in

mining and construction translated into hiring in machinery

manufacturing. The industry hired 17,200 workers in 2005,

building upon the 18,100 positions added in 2004. In electronic instruments, a mounting backlog of orders sparked a

second consecutive year of hiring.21 In contrast, an increased

backlog of orders failed to boost employment in electronic

equipment and appliances, which steadily shed jobs for the

fifth consecutive year. Since 2000, employment has fallen by

more than 25 percent, and the industry’s productive capacity

has slipped as well. The electronic equipment and appliances

component was one of the few durable goods manufacturing

industries to reduce capacity in 2005.

Similar contrasts marked transportation equipment manufacturing. Employment climbed slowly in the aerospace industry, but stalled in motor vehicles. Motor vehicle sales were

strong through the summer as “employee discount” incentive programs helped the “Big 3” move vehicles off lots.22

These rather drastic programs, however, were a symptom of

2000 2001 2002 2003 2004 2005

890

900

910

920

930

940

950

960

970

980

-150

-100

-50

0

50

100

150

Chart 6. Heavy and civil engineering construction employment, seasonally adjusted, 2000—05

NOTE: Shaded area represents NBER-designated recession.

Thousands Thousands
Monthly Labor Review March 2006 27

the automakers’ difficult financial situation. Still, the situation

did not result in net job losses in U.S. assembly plants. Most

likely, two factors have retarded layoffs: union contracts covering workers on Big 3 payrolls and foreign automakers’ expanding their manufacturing presence in the United States.23 By

contrast, financial strains have translated into considerable job

losses for suppliers,24 who cut 19,600 jobs in 2005, continuing a 5-year slide that has brought employment down nearly

20 percent.

Unfilled orders for nondefense aircraft and parts began to

rise in mid-2004, with aerospace employment in tow. The

industry brought on about 1,500 workers a month in 2005.

Demand for defense aerospace products is unlikely to have

contributed to the growth, because orders for defense aircraft

and parts have declined.25

Manufacturing output and hiring

Factory production has ratcheted up steadily since the 2001

recession, but it has not led to an employment recovery in

manufacturing. Increased production has, however, led to

hiring in a number of other industries, particularly transportation, warehousing, and distribution. (See chart 8.) Hiring in

truck transportation geared up in 2003 and has held steady

since. In 2005, the industry added 35,100 jobs. The spike in

fuel prices may have dampened hiring somewhat, but demand, not fuel prices, is what chiefly determines hiring in the

industry.26 Warehousing, which depends on manufacturing

to a similar extent, saw similar employment gains.27 Since a

November 2001 trough, employment has rebounded by more

than 90,000, with 21,100 jobs added in 2005 alone.

Wholesale trade did not reach an employment trough until

the second half of 2003, but within a year it had established a

hiring pace of about 7,000 positions a month, and it has since

maintained that rate. Like the category’s manufacturing counterpart, nondurable goods distributors made up the weakest

portion of wholesale trade, with essentially no employment

growth in 2005. Durable goods distributors, in contrast, added

51,000 jobs, with an expansion in machinery, construction supplies, and electrical goods paralleling job growth in durable

goods manufacturing. Unlike the category’s manufacturing

counterpart, the weaker durable goods wholesalers did not

shed jobs, but merely held payrolls steady. Also part of

wholesale trade is the category of electronic markets,

agents, and brokers, which increased its ranks by 3.5 percent, or 24,800 jobs, over the year.28 Steady growth has lifted

employment in the industry by 20 percent since 2001.

1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

14,000

15,000

16,000

17,000

18,000

19,000

20,000

0

20

40

60

80

100

120

Chart 7. Manufacturing employment and index of industrial production, seasonally adjusted, 

 1972—2005

Employment

(thousands)

Index

(2002 = 100)

Employment

Industrial production

NOTE: Shaded areas represent NBER-designated recessions.

SOURCE: Bureau of Labor Statistics and Federal Reserve.
28 Monthly Labor Review March 2006

Payroll Survey Developments

Industries with cyclical growth

Increasing business activity translated into hiring at corporate headquarters, which make up much of the “management

of companies and enterprises” portion of professional and

business services. Headquarters employment rose 15,000 in

2005. Still, despite nearly 3 years of growth, employment

ended the year somewhat short of its prerecession peak. The

same was the case with temporary help services.

Demand for temporary help services often leads business

cycles, because, through such services, firms can adjust their

workforces quickly to react to changes in demand that may

be only short lived. Temporary help services are a type of

just-in-time labor. Employment in the industry did indeed

begin falling 10 months prior to the 2001 recession. The

industry’s recovery, however, did not begin until May 2003,

well after the end of the recession and only 3 months before

total nonfarm employment began to rise. Temporary help

services added 167,000 workers in 2005, up somewhat from

the 150,100 increase the previous year.

Recovery came to management consulting firms earlier

than it did to temporary help agencies. (See chart 9.) Employment in management and technical consulting services

turned upward in the second half of 2002. By the end of 2003,

the job losses due to the recession were erased and employment expanded steadily. In 2005, employment in the industry rose by about 48,900, or 6.0 percent.

Architectural and engineering services weathered a more

prolonged downturn than did management consulting, but it

also has built a robust job recovery. Between July 2001 and

June 2003, the industry cut about 61,000 jobs. The subsequent turnaround made up for those job losses by the end of

2004, and in 2005 payrolls climbed an additional 4.2 percent, or 54,300 jobs. The downturn in computer systems design and related services was even more dramatic and the

recovery, through 2005, only partial. The industry shed nearly

250,000 jobs between March 2001 and August 2003, and it

has recovered slightly more than 100,000 jobs since that time.

In 2005, computer systems design added 34,900 jobs.

Cyclical gains branched into construction as nonresidential construction employment expanded, although at a pace

reduced from that seen in 2004. Following the 2001 recession, this industry was slower to turn the corner than its residential counterpart, and it continued to lose jobs in 2002 and

2003. Nonresidential building construction added 18,800

jobs to payroll in 2005, while nonresidential specialty contractors added 27,700. Despite 2005’s job growth, at years’

end neither of these two industries had recovered to its pre1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

5,000

5,250

5,500

5,750

6,000

750

1,000

1,250

1,500

1,750

Chart 8. Employment in wholesale trade and in truck transportation, seasonally adjusted, 

 1990—2005

Wholesale

trade

(thousands)

Truck transportation

Wholesale trade

NOTE: Shaded areas represent NBER-designated recessions.

Truck

transportation

(thousands)
Monthly Labor Review March 2006 29

recessionary level.

Rising business activity creates demand not only for additional buildings, but also for additional work for the building

services industry. This industry, which provides janitorial,

landscaping, and pest control services, added 48,100 jobs in

2005. Since early 2002, employment in the industry has

climbed by more than 150,000, an expansion that contrasts

with the stagnant employment trend in the waste remediation

industry, which exhibited essentially no growth in 2005.

Finally, rising business activity coincided with rising corporate profits.29 Yet, the stock markets, like payroll employment, lagged in reflecting the recovery. Although corporate

profits began to rise as the 2001 recession ended, Standard

and Poor’s (the S&P) 500 did not turn the corner until the first

half of 2003. Employment gains in the securities industry

followed not far behind.30 Renewed hiring resulted in net job

growth of 23,000 in 2004 and 12,700 in 2005.

Rising tax revenues and employment

The 2001 recession was not extraordinary in terms of gross

domestic product. If anything, the downturn stands out for

its shallowness. Government tax revenues, however, paint a

different picture, one of an unusually deep downturn following the recession.31 (See chart 10.) Since 1947, no other recession resulted in a year-to-year decline in nominal State

and local tax revenues. Also, the dip in Federal revenues was

somewhat greater and more prolonged than in previous recessions. A strong recovery followed, particularly since 2004,

with growth in Federal, State, and local tax revenues returning

to, or even exceeding, the rates seen prior to the recession.

Federal employment did not rebound with revenues, but

remained essentially unchanged in 2005. Federal payrolls are

down 67,000 jobs since 2002. Employment in State and local governments more clearly reflected the impact on revenues. Following the dip in tax receipts, States shed workers

in 2003, while local government employment was flat. In

2004 and 2005, State and local hiring picked up, driven by

State government (excluding education) and by local education. As a whole, State and local governments added 175,000

jobs in 2005. It is worth noting, however, that rising educational employment may be a more general trend—that is, one

not entirely tied to tax revenues: in 2005, private educational

services expanded at a rate similar to that of public education, with 1.0-percent employment growth translating into

27,000 jobs in private education.

In the private healthcare industry, public expenditures on

Medicare and Medicaid, as opposed to tax revenues, help

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

75

100

125

150

175

200

225

250

275

75

100

125

150

175

200

225

250

275

Chart 9. Indexed employment in temporary help services and in management and technical 

 consulting sevices, seasonally adjusted, 1990—2005

Index

(January 

1990 = 100)

Temporary help

Management

consulting

Index

(January 

1990 = 100)

NOTE: Shaded areas represent NBER-designated recessions.
30 Monthly Labor Review March 2006

Payroll Survey Developments

explain employment trends.32 Multiple other factors, especially demographics, also have propelled hiring in the healthcare industry.33 In 2005, the industry added nearly 270,000

jobs to payrolls. Private hospitals accounted for 80,200 jobs

and doctors’ offices for another 66,700. The fastest growth

came at outpatient care centers, with a 5.2-percent rate of

growth, or 23,900 additional jobs. In contrast, job growth in

home healthcare slowed notably as 22,000 workers entered

its ranks, down from 47,100 in 2004.

General population growth and a longer life expectancy

help explain the continued expansion of healthcare employment. These same factors could be expected to boost hiring

in nursing care facilities; however, since 2002, employment

in the industry has remained essentially flat. By contrast,

community care facilities for the elderly (that is, assistedliving facilities) have seen steady employment gains, with

staffing having risen by 19,500 in 2005 and 76,600, or 14.1

percent, since 2002. Falling at the other end of the age spectrum, the child daycare services industry also has continued

to sprout new jobs: hiring totaled 19,200 in 2005 and fell in

line with the trend for recent years.

Job openings and labor turnover

JOLTS measures the monthly demand for labor—the job openings rate—and the dynamic flows—hires and separations—

of the U.S. labor market. The 16,000-establishment survey

measures the number of job openings as of the last business

day of the month—a stock measure—and the number of hires

and separations occurring within the entire month—a flow

measure. Separations are further broken down into quits (voluntary separations), layoffs and discharges (involuntary separations), and other separations.

The demand for labor continued to grow in 2005, with an

additional 536,000 job openings measured on the last business day of the year, compared with the end of 2004. The

amount of churning—measured by the number of hires and

separations—grew to 57.4 million hires and 54.5 million

separations for the year. Quits as a percentage of total separations continued the category’s steady climb upward, reaching 58.9 percent by year’s end. (See chart 11.) The ratio of

quits to total separations helps gauge the health of the labor

market by indicating employees’ confidence in their ability

to change jobs.

Job openings. The job openings rate34 climbed from 2.5

percent in August to 2.8 percent in December, still below the

prerecessionary peak of 3.4 percent in January 2001. The

job openings rate increased for the majority of industries over

the year, most noticeably for leisure and hospitality and for

Federal

Chart 10. Over-the-year percent change in Federal and in State and local tax receipts, seasonally 

 adjusted, 1955—2005

Percent 

change

State and local

Percent 

change

SOURCE: Bureau of Economic Analysis.

NOTE: Shaded areas represent NBER-designated recessions.

20

40

0

–20

20

40

0

–20

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Monthly Labor Review March 2006 31

manufacturing. The remaining industries had little or no

change. Three regions—the Northeast, West, and South—

showed marked improvement over the year (although the

West retreated from a peak in November), while the Midwest

exhibited little, if any, change.

Hires and separations. The hires and total separations rates

showed no real trend throughout 2005. The hires rate was

static, ranging between 3.4 percent and 3.7 percent. The total

separations rate was not much different, varying from 3.2

percent to 3.6 percent. Nor did the two rates show a consistent trend in any industry over the year. The Northeast region

did exhibit a steady, though slight, decline in both the hires

and the total separations rates from April through December.

The West’s hires rate increased steadily over the year, and

the total separations rate followed the same pattern until it

began to decline in September.

Even though the hires and separations rates did not show a

distinct trend, the economy still exhibited a significant amount

of churning. There was an average of 4.8 million hires and

4.5 million separations per month, compared with monthly

averages of 4.6 million and 4.3 million, respectively, the previous year.

Quits continued to compose a majority of all separations

at the industry level. The construction industry and the arts,

entertainment, and recreation industry were the exceptions,

each having more layoffs and discharges than quits over the

year. Transportation, warehousing, and utilities had roughly

equal percentages of quits, layoffs, and discharges to total

separations. “Other separations” is a residual category that

includes retirements, transfers between establishments, and

those separating because they became disabled on the job.

The natural resources and mining industry, the durable goods

manufacturing industry, and the finance and insurance industry regularly had higher rates of other separations to total

separations than the other industries had.

Quits as a percentage of total separations. The South,

which, at 60.4 percent, had averaged the highest percentage

of quits to total separations in 2005, was overtaken by the

West in November. Also in November, the Northeast, which

regularly had the lowest percentage of quits to total separations since October of 2002, surpassed the Midwest. (See

chart 12.)

Unmet labor demand. Because hires are collected for the

entire month and job openings are collected as those openings which are still available on the last business day of the

month, the hires rate is usually greater than the job openings

rate. However, a few industries have shown the reverse rela2001 2002 2003 2004 2005

40

45

50

55

60

65

70

40

45

50

55

60

65

70

Chart 11.. Quits as a percentage of total separations in total nonfarm employment, seasonally 

 adjusted, 2001—05

NOTE: Shaded area represents NBER-designated recession.

Percent Percent
32 Monthly Labor Review March 2006

Payroll Survey Developments

tionship. Industries in which the job openings rate is consistently higher than the hires rate may reflect employers’

troubles filling open positions. As was the case the previous

year, two industries had job openings rates consistently

higher than their hires rates in 2005: finance and insurance,

reflecting continued employment opportunities due to historically low interest rates and the strong housing market;

and health care and social assistance, reflecting the continued need for healthcare workers. (See chart 13.) The Federal Government, State and local government, and the information industry also had difficulty filling open positions,

but not to the same degree as the finance and insurance industry and the healthcare and social assistance industry.

Annual hires and turnover rates. The 2005 annual total

separations, or turnover,35 rate increased by 1.5 percentage

points, to 40.9 percent. The annual rate is still below the

2001 rate of 41.4 percent. The turnover rate is equal to the

number of total separations for the year, divided by CES average employment for the year. The 2005 annual hires rate

increased by 1.4 percentage point, to 43.0 percent, the highest on record for JOLTS.

36

Industries known to have strong seasonal employment

patterns (accommodations and food service; arts, entertainment, and recreation; construction; professional and business services; and retail trade) consistently have annual hires

and turnover rates greater than 50.0 percent. In contrast, the

public sector and the finance and insurance industry consistently

have annual hires and turnover rates less than 25.0 percent.

The annual hires rate exceeded the turnover rate by 2.1 percentage points in 2005, approximately equal to the gap between the two measures in 2004. The annual hires rate has

exceeded the turnover rate for the past 3 years. Manufacturing

was the only industry whose turnover rate outpaced the hires

rate. Natural resources and mining had the highest annual

hires-to-turnover difference, 8.8 percentage points, followed

by real estate and rental and leasing and by professional and

business services.

GAINS ACROSS MOST INDUSTRIES LED TO A 2.0 MILLION INCREASE in

total nonfarm payroll employment in 2005. Sustained growth

in the housing market accounted for much of the hiring in construction and in some industries in financial activities and retail trade. In addition to spurring home purchases, rising consumer confidence played a role in the job gains in the leisure

industries and retail trade. Although increased manufacturing

production did not translate into an overall increase in manufacturing employment, it does help explain hiring in other inJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

35

40

45

50

55

60

65

70

35

40

45

50

55

60

65

70

Chart 12.. Quits as a percentage of total separations, by region, seasonally adjusted, 2005

Percent Percent

South

Northeast

Midwest

West
Monthly Labor Review March 2006 33

dustries, most notably trucking, warehousing, and wholesale trade. Finally, rising energy costs played a dual, contradictory role. As an added burden on consumers and businesses, it held back spending and, indirectly, employment

growth, but that effect is difficult to quantify. More obvious

was its positive impact on the employment growth rate in

mining, which easily outpaced growth rates in most other

industries in 2005.

The JOLTS job openings rate remained flat in 2005 until the

end of the second quarter, when it began to edge upwards.

Meanwhile, the hires and separations rate remained flat

throughout the year. 

Notes

1

 The Current Employment Statistics (CES) program is a monthly survey of more than 160,000 nonfarm businesses representing about 400,000

establishments. For more information on the program’s concepts and methodology, see BLS Handbook of Methods (Bureau of Labor Statistics, 1997);

on the Internet at http://www.bls.gov/opub/hom/. CES data are available

on the Internet at http://www.bls.gov/ces/. The CES data used in this article are seasonally adjusted unless otherwise noted.

2

 The Bureau of Labor Statistics collects and compiles data for the

Job Openings and Labor Turnover Survey (JOLTS) on a monthly basis

from a sample of business establishments. JOLTS data are available on

the Internet at http://www.bls.gov/jlt/.

3

 Sandra Fleishman, “Data Show a Home-Building Skid,” The Washington Post, Nov. 18, 2005, p. D2.

4

 David Leonhardt, “2005: In a Word,” The New York Times, Dec. 25,

2005, p. 4.3.

5

 Data on housing appreciation come from the Office of Federal Housing Enterprise Oversight’s House Price Index, on the Internet at http://

www.ofheo.gov/HPI.asp.

6

 “Builders Take Steps to Curb Speculation in Housing Markets,”

news release (Washington, DC, National Association of Home Builders, June 20, 2005), on the Internet at http://www.nahb.org/

news_details.aspx?newsID=1527.

7

 Data on new residential construction come from the U.S. Census

Bureau, on the Internet at http://www.census.gov/const/www/

newresconstindex.html.

8

 Data on new home sales are available from the U.S. Census

Bureau, on the Internet at http://www.census.gov/const/www/

newressalesindex.html. Data on existing home sales are available

from the National Association of Realtors, on the Internet at http:/

/www.realtor.org/Research.nsf/Pages/EHSdata.

9

 “The Conference Board Consumer Confidence Index Falls To Lowest Level In Nearly Two Years,” The Conference Board, Economic

News Archive, Sept. 27, 2005, on the Internet at http://www.conferenceboard.org/economics/ecoPress.cfm.

10 “The Conference Board Consumer Confidence Index Rises Again,”

The Conference Board, Economic News Archive, Jan. 31, 2006, on the

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Chart 13. Job openings and hires rates in finance and insurance and in healthcare and social 

 assistance, not seasonally adjusted, 2005

Percent Percent

Job openings rate, 

finance and insurance

Hires rate, finance and insurance

Job openings rate, healthcare and social assistance

Hires rate, healthcare and social assistance
34 Monthly Labor Review March 2006

Payroll Survey Developments

Internet at http://www.conference-board.org/economics/

ecopress.cfm.

11 Data on consumer spending are available from the Bureau of Economic Analysis (BEA); see “Table 2.3.6. Real Personal Consumption Expenditures by Major Type of Product, Chained Dollars,” on the Internet at

http://www.bea.gov/bea/dn/nipaweb/SelectTable.asp?Selected=Y.

12 Spencer Chin, “Sales up, but consumer confidence wanes, says CEA,”

EE Times, Nov. 15, 2005, on the Internet at http://www.eetimes.com/news/

latest/business/showArticle.jhtml?articleID=173603228.

13 U.S. Census Bureau, listings of advance monthly sales for retail and

food services and for autos and other motor vehicles, on the Internet at

http://www.census.gov/svsd/www/adseries.html.

14 Ibid., listings of advance monthly sales for retail and food services

and for food service and drinking places.

15 Energy Information Administration, “International Energy Outlook

2005,” on the Internet at http://www.eia.doe.gov/oiaf/ieo/world.html.

16 “Wal-Mart Reports Record Sales and Earnings for 2nd Quarter 2006,”

press release, Aug. 16, 2005, on the Internet at http://walmartstores.com/

GlobalWMStoresWeb/navigate.do?catg=48&contId=4975.

17 For further information on this trend, see Air Transport Association, Energy Matters: Combating the Fuel-Related Challenges

Facing U.S. Airlines, on the Internet at http://www.airlines.org/

news/d.aspx?nid=9194.

18 Federal Reserve, “Industrial Production and Capacity Utilization,” on the Internet at http://www.federalreserve.gov/releases/

G17/.

19 Ibid.

20 Ibid.

21 U.S. Census Bureau, “Manufacturers’ Shipments, Inventories and

Orders (M3),” Manufacturing, Mining, and Construction Statistics, on the

Internet at http://www.census.gov/indicator/www/m3/index.html. The

electronic instruments employment series corresponds to the unfilledorders series for nondefense search and navigation equipment, defense

search and navigation equipment, and electromedical, measuring, and

control instrument manufacturing.

22 See, for example, “A Tale of Two Industries,” The Wall Street Journal, Nov. 22, 2005, p. A14; and “A Down Detroit Dials for Discounts,

Again,” Brandweek, Nov. 21, 2005, p. 4.

23 See, for example, “The Good News about America’s Auto Industry,” Business Week, Feb. 13, 2006, p. 32.

24 See, for example, “Tier Ones take a tumble,” Professional Engineering, Oct. 19, 2005, pp. 30–31; and “Car Makers, Parts Supplier Head

for Price Showdown,” The Wall Street Journal, Sept. 14, 2005, p. A6.

25 U.S. Census Bureau, “Manufacturers’ Shipments.”

26 For the period 1990–2005, this article uses (1) the Federal Reserve’s

industrial production series for manufacturing excluding computers, communications equipment, and semiconductors and (2) the Producer Price

Index commodity data on no. 2 diesel fuel to model monthly trucking

employment. A double-logarithmic model fit the data very well for

various lagged values of industrial production, with R-square values of

at least 0.95. Although both industrial production and diesel prices

were statistically significant, there was only a weak negative relationship between fuel prices and employment. Industrial production, however, had a strong positive relationship to employment. Fuel may not

play much of a role because trucking companies often pass on some

added fuel costs by way of surcharges. Strong demand for trucking

services would facilitate the collection of such surcharges. (See, for

example, “Running on Empty,” Traffic World, Sept. 19, 2005, p. 1.)

27 About 30 percent of truck transportation services and approximately

37 percent of warehousing services are purchased by manufacturers, as reflected in the 2003 BEA input-output tables, on the Internet at http://

www.bea.gov/bea/industry/iotables/prod/table_list.cfm?anon=348.

28 Firms in this industry “arrange for the sale of goods owned by

others, generally on a fee or commission basis,” acting “on behalf of

buyers and sellers of goods.” This arrangement contrasts with that used

by merchant wholesalers, who take title of the goods they distribute and

make up durable and nondurable goods wholesale trade. (See Teresa L.

Morisi, “Recent changes in the national Current Employment Statistics

survey,” Monthly Labor Review, June 2003, pp. 3–13; or the Census

Bureau NAICS Web site at http://www.census.gov/epcd/www/naics.html.)

29 Bureau of Economic Analysis, “Corporate profits,” National

Economic Accounts, on the Internet at http://www.bea.gov/bea/dn/

home/corporateprof.htm.

30 Michael H. Strople, “Bears, bulls, and brokers: employment trends

in the securities industry,” Monthly Labor Review, December 2005, pp.

16–22.

31 Data on government tax revenues are available in the BEA National Income and Product Accounts Tables 3.2 and 3.3, on the

Internet at http://www.bea.gov/bea/dn/nipaweb/index.asp.

32 Data on Medicare and Medicaid expenditures are available in the

BEA National Income and Product Accounts Table 3.12, on the Internet at

http://www.bea.gov/bea/dn/nipaweb/index.asp. The rates of growth of

employment in general medical and surgical hospitals and nominal expenditures on Medicare and Medicaid exhibit some correlation, with a

correlation coefficient of 0.51 between 1980 and 2004.

33 See William C. Goodman’s forthcoming Monthly Labor Review article on employment in hospitals.

34 The job openings rate is the number of job openings on the last

business day, as a percentage of total employment plus job openings. All

other rates (hires, quits, layoffs and discharges, other separations, and total separations) are expressed as a percentage of employment.

35 In the context of annual turnover rates, the terms total separations and turnover are interchangeable.

36 JOLTS annual estimates are available from 2001 to the present. In

response to public interest, the Bureau of Labor Statistics began publishing annual levels and rates of hires and separations in 2006.