The Stash

What Stands Out in the Jobs Report

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Apologies for the light posting this week--I was working on a big piece that will be out soon. I'm going to take a longer look at the new job numbers before deciding if I stand by my ten-percent unemployment prediction. But, in the meantime, here are two nuggets that caught my eye:

1.) Commercial real estate continues to worry me a bit, and the jobs report flicks at the reason why:

In August, construction employment declined by 65,000, in line with the trend since May. Monthly losses had averaged 117,000 over the 6 months ending in April. Employment in the construction industry has contracted by 1.4 million since the onset of the recession. Starting in early 2009, the larger share of monthly job losses shifted from the residential to the nonresidential and heavy construction components [emphasis added].

In a nutshell, a lot of small-and medium-sized banks placed big bets on commercial real estate during the boom. So the fact that the construction job losses have been shifting to this sector has implications beyond the labor market. If commercial real estate deteriorates even as the overall construction industry improves, it could cause problems beyond the labor market--perhaps another round of financial-sector problems. (I tease this idea out a bit in this piece.)

2.) The trend lines in temporary employment are encouraging: "Job loss in its temporary help services component has slowed markedly over the last 4 months." One of the stories you often hear about the connection between the business cycle and the labor market is that temporary jobs are a leading indicator of an expansion--businesses get their feet wet by hiring temps, then, if things continue to improve, they start hiring (or hiring back) permanent workers. Here's hoping that's true in this case.

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