Economy Chugging Along

Employment in intangible-producing industries and tangible-producing industries continues trend from previous months.

January was an unexpectedly strong month for the U.S. labor market. This morning the Bureau of Labor Statistics reports that nonfarm payroll grew by a whopping 517,000 jobs and the unemployment rate dropped to 3.4%. Employment in intangible-producing industries and tangible-producing industries continue to track one another. The growth in the tangible-producing industries was the biggest in Accommodation and Food Service (up 113,400 jobs). In intangible-producing industries, Professional & Business Services (excluding tangible services) was up 72,200, Educational & Health Services (excluding tangible services) grew by 80,500 and Government (excluding Postal Service) was up 72,000.

This continuing parallel employment growth is a structural change from the pre-2010 period when employment in intangible producing industries grew as a percentage of total employment while employment in tangible producing industries declined.  

For more on the categories, see my explanation of the methodology in an earlier posting.

UPDATE: Note that BLS’s press release (and many subsequent news articles) mention the large increase in employment in the industrial category of Leisure & Hospitality. For my analysis, I use the two subcategories that make up the category: Arts, Entertainment, & Recreation and Accommodation & Food Service. I classify Arts, Entertainment, & Recreation as an intangible service. Accommodation & Food Service is considered a tangible service as it mainly involves the handling of physical objects (atoms, not bits). In January, the vast majority of the 128,000 new Leisure & Hospitality jobs were in Accommodation & Food Service (113,400 new jobs), and even more specifically in the Food Service and Drinking Places part of that subcategory (up 98,600). Thus, the job growth was due to people going out to bars and restaurants, not to activities like sporting events and concerts.

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