Disappointing June Jobs Report

The Bureau of Labor Statistics’ report of June employment offers few silver linings for the commercial real estate industry. As in previous months, job growth in June fell short of levels consistent with sustained improvements in space absorption. While no one month constitutes a trend, the pattern of frustratingly slow recovery remains a qualifier for the fundamentals outlook and current pricing and underwriting activity.

Why the historic lag in job creation? In many cases, job growth has been lackluster even when corporate profits have swelled and labor productivity has narrowed. This is consistent with a scenario where firms remain cautious in hiring, either because of concerns about the sustainability of the broader recovery in aggregate demand or because of exaggerated uncertainties stemming from unresolved policy issues.