Employment
Nonfarm payroll employment increased 2.2 million during the 12 months of 2006, an average pace of about 187,000 jobs per month. The unemployment rate declined by 0.4 percentage point during the 12 months of the year to 4.5 percent. The average unemployment rate in 2006 (4.6 percent) was below the averages of the 1970s, the 1980s, and the 1990s.
Job gains were spread broadly across major sectors in 2006, with the natural resource and mining sector (which includes oil and natural gas extraction) experiencing the fastest growth rate (8.1 percent), likely due to increased demand for energy products. The service-providing sector accounted for 95 percent of job growth during the 12 months of 2006, a slightly larger contribution than would be suggested by its 83-percent share of overall employment. Within the service-providing sector, 24 percent of job growth was in professional and business service jobs. As noted, the service-providing sector accounted for almost all of the 2006 job gains. The goods-producing sector accounted for the remaining 5 percent of the gains (notably weaker than its 17-percent share of overall employment), a continuation of the long-term trend under which the goods-producing share of total employment has fallen in each of the past five decades. Within the goods-producing sector, employment growth during 2006 was concentrated in mining and construction, while manufacturing employment decreased for the ninth consecutive year.
Jobless rates fell among most major demographic segments of the population during the 12 months of 2006. The unemployment rate dropped for each of the four educational-attainment groups (less than high school, high school, some college, and college graduates). For the second consecutive year, the drop in the unemployment rate was most pronounced among those without a high school degree. After falling 0.8 percentage point during 2005 (when the overall rate fell 0.5 percentage point), the jobless rate in this group fell another 0.7 percentage point during the 12 months of 2006 (when the overall unemployment rate fell 0.4 percentage point). By race and ethnicity, the unemployment rate fell the most during 2006 among Asians, Hispanics and blacks (1.4, 1.1 and 0.9 percentage points), in contrast to 0.2 percentage point for whites. By age, the jobless rate fell most among workers 25 to 34 years old. By sex, the jobless rate fell more among adult women than adult men.
Furthermore, the median duration of unemployment, an indicator that typically follows the business cycle with a substantial lag, declined from its December 2005 level of 8.5 weeks to a December 2006 level of 7.3 weeks, close to its historical average. The number of long-term unemployed (those out of work for more than 26 weeks) fell by 263,000 during the year.
The Administration projects that employment will increase at a pace of 129,000 jobs per month on average during the four quarters of 2007. In the long run the pace of employment growth will slow, reflecting the aging of the population and the diminishing rates of labor force growth. The Administration also projects the unemployment rate will average 4.6 percent over 2007, before edging up to 4.8 percent in 2008 and beyond.