Economy Watch: Job Creation Pace Slows in March
- Apr 06, 2012
The Bureau of Labor Statistics reported on Friday that the U.S. economy created a net of 120,000 new jobs in March, less than expected after a run of months in which employment gains were over 200,000 (and in fact, the average for the previous three months was twice March’s total). The private sector hired 121,000 people in March, with some gains in manufacturing and health care. Public employment at all levels was down a little. The nation’s unemployment rate dropped from 8.3 percent to 8.2 percent, according to the BLS.
On Thursday, the government reported that for the week ending March 31, initial unemployment claims were 357,000, a decrease of 6,000 from the previous week’s revised figure of 363,000. The four-week moving average, which isn’t as prone sharp to ups and downs, was 361,750, a decrease of 4,250 from the previous week’s revised average of 366,000.
The outplacement firm Challenger, Gray & Christmas said on Thursday that planned job cuts in March reached the lowest level since May 2011, with employers (both public and private) announcing only 37,880 layoffs. The March job-cut total was down about 27 percent compared with February, and 9 percent lower than the same month last year. The company did warn, however, that the lull on public-sector layoffs might only be temporary, reflecting the negotiating period before new state (and harsher) budgets are approved and the realities of an election year to boot.
Office vacancies edge down during Q1
Reis Inc. reported on Thursday that the U.S. office vacancy rate (representing 79 markets) was down slightly in the first quarter of 2012 to 17.2 percent, compared with 17.3 percent in the last quarter of 2011. During the first quarter of 2011, Reis reported that the vacancy rate was 17.6 percent. It’s a recovery for office space, but one that’s been eked out.
The total absorption for U.S. office space during the first quarter of 2012 was about 6 million square feet, up from a quarterly absorption average of 5.1 million square feet during the four quarters of 2011. Most American office markets still have quite a ways to go in their recovery because tenants vacated roughly 140 million square feet nationwide in the aftermath of the economic shocks of 2008 and, according to Reis economist Ryan Severino, the pace of job creation hasn’t “moved the needle yet” for re-absorbing anything but a fraction of that space.
Asking rents for office space were up a bit in the first quarter, 0.5 percent, compared with the previous quarter, noted Reis. At an average of $28.10 per square foot, office rents also have a ways to go to reach pre-recessionary levels. During the third quarter of 2008, asking rents stood at a record high of $29.37.
Renting REO houses OK
The Federal Reserve said on Thursday, in the form of a policy statement, that it will allow banks and other lenders with REO residential properties to rent them under less strict conditions, because things are so generally crummy in the housing market. To quote the policy statement: “In light of the extraordinary market conditions that currently prevail, the policy statement explains that banking organizations may rent residential OREO [other real estate owned] properties within legal holding-period limits without demonstrating continuous active marketing of the property for sale.”
The central banks’ statement is probably to help kick start more efforts like that of Bank of America, which recently began a pilot program that allows homeowners at risk of foreclosure to enter into a “deed-in-lieu” of foreclosure agreements with the bank that would allow them to lease the house. So far the BofA’s “Mortgage to Lease” pilot is small, however, involving only about 1,000 homeowners in three states.
Wall Street had a lull itself on Thursday ahead of official employment numbers, with the Dow Jones Industrial Average dropping 14.61 points, or 0.11 percent, and the S&P 500 losing 0.06 percent. The Nasdaq gained 0.4 percent and, in other news about that exchange, Facebook reportedly wants to be listed there (or one could say, it friended the exchange).