News/Blog
Good News Friday: Good News… But You Have to Look Carefully
The July employment report released this morning by the Bureau of Labor Statistics confirms other indicators pointing to a slowdown in the recovery. The labor market continues to plod along.
· Private sector employers added 71,000 payroll jobs last month, but a loss of 202,000 government jobs drove the top-line number down to -131,000. The losses in government employment were comprised of 154,000 at the federal level including the elimination of 143,000 temporary census jobs, 10,000 state government jobs and 38,000 at the local level. State and local governmental units, struggling with plunging tax receipts and restricted from running deficits, laid off workers to balance their budgets.
· Manufacturing and healthcare employers created 36,000 and 27,800 jobs respectively, although the seasonal adjustment factors may have upwardly distorted the manufacturing number because GM kept its production lines running this summer. Financial jobs fell by 17,000 and construction by 11,000 as both sectors were hit by the expiration of the homebuyer tax credit in April.
· The unemployment rate was 9.5 percent, unchanged from June.
· Average hourly earnings and the average workweek increased slightly.
So where’s the good news, you ask?
· The Job Openings and Labor Turnover Survey also conducted by the Bureau of Labor Statistics is a little more optimistic. JOLTS shows an increase of about 1 million job openings from July 2009 through May of this year.
· The Monster Employment Index of online advertising rose 21 percent for the 12 months ending in July.
· The nonmanufacturing index from the Institute for Supply Management increased slightly in July to 54.3 from 53.8 in June. (Index values above 50 indicate expansion.) The component sub-index measuring nonmanufacturing employment prospects was 50.9, a slight increase from June.
The fact that the labor market continues to plod along, while clearly disappointing, shouldn’t be too surprising because the last two recessions were followed by extended jobless recoveries. And the current recovery is not actually jobless; the labor market has added 654,000 payroll jobs this year of which 630,000 are in the private sector. Inflation and interest rates are very low and likely to stay that way for an extended period. Low interest rates and mediocre returns for other asset classes have attracted investment capital to high-quality commercial properties in the top markets, driving down cap rates and generating multiple bids for properties fitting this profile.
-Bob Bach, Grubb & Ellis Senior Vice President, Chief Economist
