In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the BLS jobs report.
- The job gains are just too slow. Today’s employment figure of 80,000 net new payroll jobs in June marks the third consecutive month of subpar performance. The economy needs to create 250,000 net new jobs every month for the next 10 years to get us to the normal 5 percent unemployment rate.
- Gains occurred primarily in the ‘temporary help’ sector, which added 25,200 jobs. The leisure and hospitality industry added 13,000 jobs, while the manufacturing sector generated 11,000 jobs. The hard hit construction sector, despite increased business activity this year, is barely hiring, with only 2,000 job gains in the month. Construction workers and general contractors who already have jobs are evidently being asked to do more as companies are shy about hiring new workers. Government jobs shrank by 4,000.
- The slow job creation had no impact on the official unemployment rate, which stands at 8.2 percent. If the subpar performance continues then the unemployment rate flashing in peoples’ minds by the November election date could be as high as 8.5 percent. If jobs pick up to over 200,000 per month until the election then the unemployment rate may slide down to 7.9 percent.
- Of those people with jobs, the average hourly earnings rose to $23.50, a gain of 45 cents from one year ago. This gain of 2.0 percent is slightly higher than the most recent 12-month consumer price inflation of 1.7 percent. Inflationary pressure is not building from the job market, something to note among gold investors.
- One disturbing aspect of recent hard times is that the number of people in the labor force, those with jobs and those actively looking for jobs, are at essentially the lowest point in nearly 20 years. There has been a notable increase in the number of people who are of working age but just not looking for work. And they are not counted in the unemployment statistics. Some have extended their schooling years (raking-in college debt). Others have taken an early retirement package or decided to go on disability benefits. And then there are the jobless who have simply given up looking for work for whatever reasons.
- Despite the less than ideal job market conditions, the economy is in no danger of a fresh recession, where jobs get cut. The current job creation is slowly adding up the number of potential homebuyers and number of new occupants for commercial real estate properties. From the low point in early 2010, 4 million net new jobs have been added to the economy. It looks like 1.5 million net new jobs will be created for all of this year. Still worth repeating, the economy needs to create 250,000 net new jobs every month for the next 10 years to get us to the normal 5 percent unemployment rate.