Good News Friday - December 4, 2009

Some Really Good News

It’s never a good idea to extrapolate from a single data point, but this morning’s far-better-than-expected November report from the Labor Department raises the possibility that employers could begin adding jobs sooner than expected. Just 11,000 payroll jobs were eliminated last month, well below the consensus for a loss of 125,000, while the unemployment rate declined from 10.2 to 10.0 percent. September and October losses were revised lower by a combined 159,000. Temporary employment, which precedes permanent hiring, has been growing since August, up by 117,000 over the past four months.

A near-term resumption of employment growth would have positive implications for consumer confidence and spending and perhaps negative implications for higher inflation and interest rates. For commercial real estate, where demand depends heavily on job growth, it would lend support to net operating incomes and property values, helping to cushion the distress that continues to mount from the lack of debt capital available to renew maturing loans.

The November jobs report could be an outlier with more losses to follow in the coming months, and the drop in the unemployment rate is likely to prove temporary. But it is one more piece of evidence that the economy is on the right track, which is really good news.

Have a great weekend.

Robert Bach
SVP, Chief Economist
Grubb & Ellis
312.698.6754