Unemployment Rate is Down, But Growth is Slowing;Is the Market Out Over its Skis?

Employment numbers are out today and as usual, headlines are focused on the improvement in the overall employment rate to 7.7%, down 20 basis points from last month and 60 basis points y/y.

Construction employment was particularly impressive, up 2.9% y/y (NSA), with strength in all major areas including Heavy Civil (+4.6%), Residential (+3.4%), Arch / Eng (+2%) and Non-Residential (+1.9%).

However, as the charts show below, growth rates are slowing for all but one major end market that uses constructed facilities. These end markets account for 85% of Total Non-Farm employment.

Slowing growth means employment trends appear unlikely to break through old highs from five years ago. With the market breaking through old highs but employment growth waning, I question whether Mr. Market is out over its skis on the continued strength of this recovery, particularly given the brevity of the US "Manufacturing Renaissance". 

Y/Y changes in employment by sector last 12-mos vs prior 12-mos (click to enlarge)