by Calculated Risk on 10/03/2006 01:58:00 PM

So far the housing bust has had little impact on employment. The following two graphs are the areas I've been watching closely: residential construction and retail employment.

Click on graph for larger image.Note the scale doesn't start from zero: this is to better show the change in employment.

Residential construction employment is down about 1% from the peak in February. There is probably a significant cash economy (including illegal immigrants) working in residential construction, and these workers might be the first to be let go. But I expect BLS reported employment in residential construction will start declining soon.

Professor Roubini expects housing to impact the employment numbers this week:

I expect that September payroll figures could be as low as 70,000 (against a consensus of 128,000) as the housing and housing related sectors will start to take a toll on employment.

Retail employment has been trending down, and the YoY change in retail employment is now -0.7%. The YoY decrease in retail employment is concerning: see Retail Employment

On retail, the Chicago Tribune reports (hat tip Kett82): Housing skid's latest victim: Holiday hiring

If you need a little extra cash for the holidays, finding a temp sales job at the local mall could be tougher this year, says Challenger, Gray & Christmas Inc.

The Chicago-based outplacement firm predicts that seasonal hiring won't keep pace with the 5 percent to 5.5 percent sales increase economists are forecasting for the October through December holiday season.

The reasons: Stores are taking a cautious approach to the holiday in light of the slowdown in housing demand. Rising interest rates means fewer consumers are pulling cash out of their homes. And the spread of self-serve checkout lanes and electronic inventory control means retailers need fewer sales clerks and stockroom workers to sell merchandise.

If there is a downward cycle associated with the housing bust, it will come from lower housing related employment and less borrowing from the home ATM. There has been some evidence that mortgage equity extraction decreased slightly in Q2, but so far housing related employment has been steady.