In recent weeks, the pace of layoffs has accelerated. It has been creeping higher since September, but still stands close to historically low levels. The number of hours employees are working has declined as companies have cut back on overtime. And while the economy continues to create new jobs, the pace of job creation has slowed. Economists expect that just 58,000 jobs were added in March, and they figure the surprisingly high 135,000 new jobs the government said were created in February will be revised lower when the latest jobs report is released tomorrow.
Consumer demand is at the center of understanding the health of the employment situation.
People have continued to spend money, largely because they still have job security. If consumer demand remains strong, labor will be needed to produce goods once the current inventory correction is over. This whittling down of inventory is one factor that has hurt companies, as they've been forced to slow production and work through their existing stockpiles. It could be that consumer demand will buoy the economy, and companies will weather the downturn for a couple of quarters without the unemployment rate jumping. Job creation in the construction industry, due to strength in housing and nonresidential building, has remained strong.