By Ken McCarthy
(NEW YORK) January 7, 2011
C&W Economic Update
US December Employment: Better than it looks, but…
(Below please find a reblog of an excellent report by Ken McCarthy of C&W with his perspective on the release of today’s employment figures.)
US payrolls increased by 103,000 jobs in December, an improvement on the growth in November, but below the general expectation. The good news is the level of employment in both October and November was revised upward substantially. October’s gain, originally reported as +151,000 jobs was revised last month to +172,000 and is now +210,000 and the November increase was revised from +39,000 to +71,000. So over the past three months, the economy has added, on average, 128,000 jobs per month, good, but not enough to substantially lower the unemployment rate on a sustained basis. The unemployment rate did drop sharply in December to 9.4%, the lowest level in a year and a half, but that appears to be a fluke caused as much by people dropping out of the labor force as by hiring.
The job growth was broad based, with increases in almost every major category from manufacturing (+10,000) to retail (+12,000), financial (+4,000) and professional services (+7,000). Leisure and hospitality showed a surprisingly large increase (+47,000) led by employment in restaurants. The largest decline was in Government (-10,000) where sharp declines in local government employment offset an increase in employment in the Federal Government. Private sector employment was up 113,000 and increased by 1.3 million jobs in 2010. At this pace it will be a long time (seven years) before all the jobs lost in the recession are recovered.
In the key office-using sectors employment barely budged, up 7,000 jobs, as the modest growth in professional services and financial was offset by a decline in information (-4,000). This slowdown comes after a very strong and upward revised November, so the trend over the latest three months remains healthy.
For the commercial real estate industry, this report is moderately better than last month, but not very exciting. Employment, the key driver of demand continues to grow at a moderate pace.
I do expect this pace to accelerate in 2011 as the recovery gains momentum. As Fed Chairman Bernanke said earlier today “…we have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold.” As a self -sustaining recovery does take hold, which I anticipate in the first few months of 2011, employment growth should accelerate from the roughly 100,000 jobs per month of 2010 to 200,000 or more per month. That sort of growth will lower unemployment and boost demand for space substantially.
We’re not there yet, but the economy is moving in the right direction.