WASHINGTON, DC-The Department of Labor is reporting that the US economy added just 69,000 jobs in May and that the unemployment rate rose to 8.2%, from 8.1% in April. The news is a disappointment, suggesting the derailment of the US job-growth trajectory that appeared so positive at the end of the year–when the economy was ringing up a number of months in which 200,000-plus jobs were added. (For the full report, click here.)
Last month, hopeful observers were theorizing that the economy was briefly slowing because it had added more jobs than expected during the warm winter months. The May unemployment report has squelched those theories and replaced them with a more worrisome theme: that the Eurozone’s problems and a possible slowdown in China are already having an impact here.
Perhaps the best news of the report is no news—namely, there was no noticeable retreat from the slow progress that has been made thus far. Job creation in the office-using sectors of professional and business services were essentially unchanged from May, with job losses in accounting, bookkeeping and in services to buildings and dwellings offset by gains elsewhere in the industry. Employment was also stagnant in the mining and logging, retail trade, information, financial activities, leisure and hospitality and government sectors.
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Health care, transportation and warehousing, and wholesale trades did see job growth. Health-care employment rose by 33,000, mostly in ambulatory services. The transportation and warehousing sectors added 36,000 jobs. Positions in the wholesale trades rose by 16,000 for the month. Manufacturing continued its upward trend, rising by 12,000 positions in May, following a 9,000 bump in April.
In a particularly worrisome sign for the commercial real estate industry, construction employment declined by 28,000 jobs in May, with losses concentrated in specialty trade contractors and in heavy and civil engineering construction. The Associated General Contractors of Americas notes that this is the largest decline in two years, and places construction employment at the lowest level since last August.
“With construction employment shrinking for the fourth month in a row, the industry is clearly having a difficult start to the year,” says Ken Simonson, the association’s chief economist, in a prepared statement. “In particular, cuts to public-sector investments in construction are taking their toll, given that heavy and civil engineering construction experienced the largest employment decline within the sector.”
Even where jobs seem to be on the rise, they aren’t moving the leasing needle. Job growth in New York City has remained robust during the first half of the year, but despite the additions in industries like technology, retail and creative services, office leasing has stayed somewhat flat. According to a new report from Eastern Consolidated, the city added 10,200 jobs in April, posting a year-to-date increase in jobs of 54,900 – equating to the total jobs added in all of 2011.
Of course, not everyone is pessimistic about the most recent numbers. As GlobeSt.com Thought Leader Hessam Nadji, senior vice president and managing director of Marcus & Millichap Real Estate Investment Services says in his most recent blog: “Despite the setback of the last two months, the average pace of job growth has doubled to 200,000 per month in the past six months compared with the prior six-month period. Admittedly, this trend may come under pressure if companies become overly cautious in response to rising fear contagion in the financial markets, but employment growth and most other economic indicators still point to a stronger economy, improved end demand, and companies’ need for workers at an organic level.
“Uncertainty has circumvented the natural progression of cyclical payroll expansion and, at least for the next 12 months, the trend line will reflect a frustratingly gradual recovery path in jobs,” he continues. “Therefore, most sectors of commercial real estate. However, the regained strength in our economic base should be acknowledged and not overshadowed by skepticism.”