Employment fell in manufacturing by 12,000 and in construction by 3,000.   
 
Housing starts seem to have leveled off but more employment losses may be expected as lower priced homes are built in an adjusting housing market. 
 
Durable goods manufacturing outside the automotive industry remains robust but competition from Asian imports, benefiting from undervalued currencies and other subsidies, limits employment. Over the last 80 months, manufacturing has shed 3.1 million jobs.  Were the trade deficit cut in half, manufacturing would recoup about 2 million of those jobs. 
 
In 2006, the dollar weakened but mostly against the euro and other western currencies where exchange rate movements have minimal effects on exports and imports. Against the important Chinese yuan, the dollar remains too high, and the yuan sets the pattern for other Asian currencies, which are critical to reducing the non-oil trade deficit.   
 
Unless Secretary Paulson finds a way to succeed in talks with China, in a way his predecessor John Snow could not, Americans can expect slow growth, and the continuing loss of manufacturing jobs. 

[edited by Simon – Added categories]

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