Fears Grow Recovery Is Stalling

WASHINGTON, DC-The Labor Department’s monthly unemployment figures, released Friday, considerably dampened hopes that the economic recovery would be a robust one. The agency reported the addition of 83,000 private sector jobs added to payrolls last month. It also said that 125,000 jobs were lost--a number that included the loss of temporary jobs created by the US Census. 

Fears that the economy may be headed for a double-dip recession appear to be overblown, for the moment at least. The nation’s unemployment dropped to 9.5%, down from 9.7% in May. Also, the 83,000 jobs created last month were higher than the 33,000 jobs created the prior month, according to newly-revised figures. Still, economists had been hoping for job creation to breach the 100,000 mark at the very least. The economy requires 130,000 to 150,000 jobs created every month to keep pace with new workers entering the labor force. 

For the commercial real estate space, which is pinning its hopes of a robust recovery on strong job growth, the latest figures are disappointing. There is some cause for muted optimism in the numbers though: what job creation there was, largely occurred in sectors that require office space, such as professional and business services--although half of those 46,000 newly-created positions are temporary. Other areas of job growth also benefit real estate: the leisure and hospitality sectors added 37,000 jobs; education and health care added 22,000.

Sectors that posted job losses include construction, financial activities and local government, which cut 22,000, 15,000 jobs and 8,000 positions, respectively. 

The DC region, as usual, posted numbers at odds with national trends. Rapid government expansion and solid contractor growth has helped the Metro DC region gain 13,200 jobs over the past 12 months, Jones Lang LaSalle’s research director, Scott Homa, notes. To be sure, that is below the area’s long-term average of 45,000 to 50,000 jobs gained per year, he tells GlobeSt.com. "The region nevertheless displayed a level of durability and resiliency that few markets across the country have shown.

Also, he says, while the recent volatility in the global equity markets and discouraging national employment figures are definitely cause for concern for the Metro DC region, "our area is fortunate enough to be insulated by the enormous, non-cyclical spending of the federal government."

Submarkets with the densest concentration of federal agencies and contractors, such as Arlington, Alexandria and NoMa, should see little to no impact from the continued volatility in the private sector, he also says. "However, areas with a large presence of multi-national corporations, such as Tysons Corner, Merrifield and Bethesda, could encounter additional headwinds in light of these rather discouraging national employment figures."