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Professional Services Leads, Construction Lags US Job Growth

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Jobs have recovered from their recessionary abyss

The financial crisis hit all sectors of the US economy (SPY) in terms of job losses. Since it was the housing bubble and the mortgage debt crisis that led to the Great Recession, construction and financial services (XLF) industries were the first to come under the axe. However, we’ve seen these sectors recover well from their post-crisis abyss.

The headline unemployment rate is down from more than 10% to less than 5% currently. On a sectoral level, the construction sector seems to be lagging behind on the job growth front.

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Which sectors have led US job gains?

Since the financial crisis, we’ve seen the energy sector (XLE) and the professional and business services sector gain well in terms of job creation. The technology sector, which tracks the Technology Select Sector SPDR ETF (XLK), has risen more than 63% over the last five years. Until mid-2014, energy sector companies’ equity also did well in the United States. However, the slump in oil prices after mid-2014 reversed the gains made over a period of three years in just 18 months.

The retail (XRT), financial services, and real estate sectors have also recovered in terms of job growth. However, the recovery has been muted compared to the oil and gas segment of the professional and business services segment.

Wage inflation remains a concern for the Fed

On the wage front, in 2015, we saw better progress in industries such as utilities, information, and retail. The transportation, mining, and healthcare industries lagged behind in terms of job creation in 2015.

The prevalence of slack in the labor market is evidently hindering wage growth. Despite economic expansion and increased spending, wage growth in the United States remains lackluster. Wage inflation remains a concern for the US Fed.

According to Bill Gross, the Fed definitely needs to reassess the economy’s direction. Gross recommends fiscal measures as a fix for the problem.

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