By: Ross Moore | Chief Economist, Colliers USA
Earlier today, the Bureau of Labor Statistics (BLS) released the December job numbers which came in considerably below consensus. Most economists were expecting 175,000 new jobs but actual employment gains were just 103,000. October and November job numbers were, however, revised upward by 70,000, but the general tone of the report was negative in light of the build-up in expectations over the past several weeks. The key take-away from this month’s employment report should be that employers are not rushing to hire, but jobs will be created in increasing numbers as the year unfolds.
Private Sector Employment Up for 12th Consecutive Month
As the chart below reveals, private sector employment continues to grow with the addition of 113,000 jobs in December, capping off a year of unbroken increases totaling 1.35 million new jobs. On a year-over-year basis private sector employment was up 1.3%. This confirms our view that many businesses are back on a firm footing and are beginning to ramp up for expansion. Dragging the job numbers down, however, are state and local governments which are being forced to shed jobs in an effort to balance their respective budgets. For the month of December state and local employment fell by 20,000. This trend is expected to continue and depending on what actions the new Congress takes, federal employment may also be a future drag on the labor market.
Manufacturing Up After Four Down Months, Professional and Businesses Employment Up 2.2% Year-over-Year
Manufacturing employment rose by 10,000 jobs in December after a four month string of job losses providing a degree of optimism for the manufacturing sector. For the year 136,000 manufacturing jobs were created which represented a 1.1% increase over the year. Trade, Transportation and Utility (TTU) employment enjoyed a particularly robust month with employment up 31,000 and 227,000 for the year. On a year-over-year basis TTU employment was up 0.9%. Both manufacturing and TTU are expected to continue adding jobs and will serve as important drivers for the industrial market. Key to the office market is employment in the professional and business services sector which finished 2010 with 7,000 new jobs in December and 366,000 for the year. For 2010 professional and business services employment was up 2.2%.
2011 Monthly Employment Reports Should Get Better as the Year Progresses
While the December jobs report was disappointing and not a good way to finish the year, many economic indicators suggest employment is about to pick-up. Because employment is a lagging indicator, we may not see a substantial increase in jobs until the second quarter or possibly not until after midyear. While the delay will be frustrating to many, it is safe to say the labor market is finally on the mend.
Ross Moore is the Colliers International’s Chief Economist with a focus on providing bottom-up and top-down analysis of commercial real estate markets across the United States. In addition to his North America wide reports, Ross also authors all global research produced by Colliers.