Caterpillar Job Woes Expose Weak Spots in Buoyant U.S. Reportby and
Government report shows declines in mining, energy jobs
Falling equipment orders hurt Caterpillar profit last quarter
With few exceptions, the U.S. jobs report Friday showed solid hiring reflecting buoyant demand across a wide swath of industries. Unfortunately for Caterpillar Inc., many of its customers are among those exceptions.
U.S. employers added 271,000 workers in October, the most this year, helped by gains in retail, health care and building, a Labor Department report showed Friday. By contrast, payroll losses continued in mining and oil-and-gas extraction, where companies are trying to cut costs as commodity prices plunge. Caterpillar said last month that slowing demand from metals and energy companies helped erode third-quarter profit.
One bright spot for Caterpillar was in construction industries, which had the strongest hiring in eight months. Housing starts in the U.S. climbed to the second-highest level in eight years in September, a government report showed last month. The figures herald improved demand for the Peoria, Illinois-based company’s equipment such as bulldozers and excavators. Caterpillar declined to comment on the payrolls data.
Even the strength in construction doesn’t signal immediate relief for Caterpillar, Stephen Volkmann, a New York-based analyst at Jefferies LLC, said.
“The problem is, these are the guys who build houses,” Volkmann said in a telephone interview Friday. “It’s skewed more toward the labor-intensive pieces which are less equipment-intensive.”
Any relief, though, is better than none, he said.
“It’s been such an anemic recovery so far, that it’s nice to see a little something,” Volkmann said. “What the economy is showing is that even though jobs in oil and gas and mining are declining, we’re more than making up for it elsewhere. The consumer is winning.”