Good News Friday - August 7, 2009
Hurting Less
It has been tough writing the Good News Friday report on those Fridays when the U.S. Bureau of Labor Statistics releases its monthly Employment Situation report, usually the first Friday of every month when data for the previous month is released. There has been very little good news in the labor market since December 2007, the last month when employers added jobs. And because this report, arguably, is the most widely followed and influential of all economic indicators, it’s hard to ignore it and focus on a different corner of the economy where the news is better. This release often sets the tone for business reporting and public policy discourse over the next four weeks.
The July report, released this morning, continues the string of losses, but several elements of the report fall into the silver lining category:
• The 247,000 payroll jobs lost in July is the lowest level since August 2008, the month before the credit markets crashed. It is significantly better than the pre-release consensus among economists for a loss of 320,000.
• There was a net upward revision of 43,000 jobs in the May and June data that was previously reported.
Educational and health services led the way once again with 17,000 net new jobs created in July. Other sectors adding jobs: leisure and hospitality with 9,000, government with 7,000 and other services with 2,000.
• Although the unemployment rate dropped by a tenth of a percentage point to 9.4 percent, much of that decline was due to workers exiting the labor force, i.e. discouraged workers. Nevertheless, it ends a string of nine consecutive monthly increases and suggests the unemployment rate could peak earlier than expected.
• The average workweek increased slightly from 33 to 33.1 hours, a hopeful sign in that longer workweeks tend to precede an increase in hiring.
Job losses exact a toll on the social fabric of the country, and they have a big impact on consumer spending, which accounts for around 70 percent of the economy. Moreover, they directly impact leasing market conditions for commercial property. Consequently, job losses are never good news. But today’s report showing diminishing losses and other encouraging details is consistent with a late-stage recession/early-stage economic recovery. The pain is easing.
Have a great weekend.
Robert Bach
SVP, Chief Economist
Grubb & Ellis
312.698.6754