A Midsummer's Employment Update

The Employment Outlook

The Bureau of Labor Statistics released the preliminary Employment Situation report for June last Friday. As expected, non-farm payrolls fell as 225,000 temporary Census workers completed their work terms. Across the public and private sectors, non-farm payrolls dropped by 125,000 jobs; the sharp decline in government employment was partly offset by a net increase of 83,000 private sector jobs. The unemployment rate fell from 9.7 percent in May to 9.5 percent in June, but this result followed from a decline in the labor participation rate.

The increase in private payrolls fell short of market projections, leading many commentators to conclude that the recovery has lost its early momentum. Perspective matters in this assessment. Nothing in the historical record suggests that each month of the recovery should improve upon the last. Taking a long view, the six consecutive months of private sector job growth beginning in January has actually outpaced the last labor market recovery. Of course, job losses during this recession have easily surpassed prior decades’ downturns and we have a long way to go before demand for related commercial real estate returns to previous levels.