Payroll employment gains dipped in the summers of 2010 and 2011, raising the specter of a recession, only to rally in the fall of those years. True to form, employment in 2012 was strong in the first quarter before trailing off in the second quarter. This morning the Bureau of Labor Statistics reported that the labor market is off to a respectable start in the third quarter. Could it be the start of a third annual rally from the summer doldrums?
The sectors of the labor market most important to commercial real estate saw employment growth accelerate in July.
- Employers added 163,000 net new payroll jobs in July according to the Bureau’s establishment survey, handily beating the 95,000 expected by analysts. Revisions to May and June were insignificant – a net loss of 6,000.
- Most sectors were in the black last month. Professional and business services led with 49,000 followed by education and health services with 38,000, leisure and hospitality with 27,000 and manufacturing with 25,000.
- Government jobs declined by 9,000, meaning that private sector employment increased by 172,000.
- Average hourly earnings inched ahead by 0.1% following June’s robust gain of 0.3%.
- The average work week for all private employees was unchanged at 34.5 hours.
- The unemployment rate, calculated from the separate household survey, increased a notch to 8.3% as the civilian labor force and the employment level both declined (not an encouraging trend).
- The U-6 rate, which includes discouraged workers and part-time workers who want a full-time job, increased from 14.9 to 15.0%, the third consecutive monthly increase.
While the July jobs report, particularly the establishment survey, was encouraging, it is only one month’s worth of data, meaning that it is too early to call the end of the summer dip. This is especially true given that other economic indicators such as factory orders and retail sales are weak. Nevertheless, the jobs report sets the tone of economic discourse for the ensuing month, so we’re off to a good start.
- The office-using sectors of professional and technical services, information, and finance together added 29,900 jobs in July versus a gain of 17,100 in June.
- The sectors of the economy most important for the industrial market – manufacturing, wholesale trade, and transportation and warehousing – added a combined 41,100 jobs in July, up sharply from the 17,400 jobs gained in June.
- Retailers added 6,700 positions last month compared with a loss of 3,200 in June.
- The leisure and hospitality sector added 27,000 positions last month versus 10,000 in June.