"Jobless claims drifting up as they have is consistent with a slowdown" in GDP growth in the second half of the year, said John Silvia, chief economist at Wachovia.
The uptrend comes as mortgage-related firms slash tens of thousands of jobs amid a housing slump and credit crunch.
Housing starts have crashed 40% from their peak. But construction jobs have fallen just 1% from their cyclical high of 7.725 million reached last September.
Economists say the actual employment figure probably is much lower, partly because builders haven't reported layoffs of undocumented workers and other off-the-books personnel.
"There's a fair amount of labor in the construction industry that is not captured in the payroll survey," said Steve Cochrane, an economist at Moody's Economy.com.
Construction employment may be 160,000 below what current government data show, according to a study last month by Macroeconomic Advisers.
"There are less and less jobs every day," said Mario Lopez, lead organizer for the Cypress Park Community Job Center in Los Angeles. "It's a real problem for us."
If job losses are larger than official stats, consumer spending may face more pressure.
Here is a chart from the Bureau of Labor Statistics of construction employment. Economists have advanced several theories as to why this number has not dropped in conjunction with the large drop in housing starts. The most common that I have seen are:
1.) Non-residential construction has absorbed the slack (which I have advanced)
2.) The use of illegal/undocumented labor skews the numbers
In reality, I think we are seeing a combination of these two factors in the construction numbers. Non-residential construction spending has been increasing over the last year. In addition, I would assume that undocumented/illegal labor would be the first to go in a slowdown.
However, the low reported unemployment rate does not jibe with several other economic numbers one of which is consumer spending. Inflation-adjusted consumer spending has been slowing down on a month-to-month basis for the last 5 months. It was revised down to 1.4% growth in the latest GDP report. However, a loss of 160,000 construction jobs is more consistent with a slowdown of that magnitude.
