Jobs Figures, CRE Prices

In more unsettling employment news, the Conference Board said that its employment trends index declined for the second month in a row in May to 99.7, down from April's revised figure of 100.1. On the other hand, the May figure is still up 5.3 percent from a year ago.

June 6, 2011
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user totalAldo

In more unsettling employment news, the Conference Board said that its employment trends index declined for the second month in a row in May to 99.7, down from April’s revised figure of 100.1. On the other hand, the May figure is still up 5.3 percent from a year ago.

May’s decline was driven by negative contributions from four out of the eight components. The weakening indicators were Percentage of Respondents Who Say They Find “Jobs Hard to Get”;Percentage of Firms With Positions Not Able to Fill Right Now; Number of Temporary Employees; and Real Manufacturing and Trade Sales, which is a forecasted component.

Thus the vicious cycle of unemployment might be re-asserting itself. That is, companies aren’t hiring because the economy is thought to be getting worse, a situation exacerbated by high employment, which is a drag on the economy. “We expect moderate job growth to continue, but it is becoming clear that employers are reacting to the growing uncertainty in the U.S. economy by slowing down hiring,” Gad Levanon, associate director, macroeconomic research at the Conference Board, noted in a statement.

Green Street Sees Advancing CRE Prices

Green Street Advisors’ Commercial Property Index was up 3 percent in May, according to the real estate consultancy. The index represents a time series of unleveraged U.S. CRE values that, Green Street explains, captures the prices at which commercial property transactions are currently being negotiated and contracted.

According to this measurement, CRE has increased in value by more than 45 percent from its 2009 trough, meaning that three-quarters of the decline that occurred from 2007 to ’09 has been erased. Prices are back to where they were in late 2006, and are now only 10 percent below their all-time highs, asserted Green Street.

“Capital availability has improved markedly, and the cost of that capital has fallen as well,” Mike Kirby, the firm’s director of research, said in a statement. “The combination of improved access to capital, return hurdles that are once again nearing all-time lows, and strengthening property fundamentals has caused buyers to become much more aggressive. This has benefitted high-quality properties in particular, but prices of lower quality properties have also been rising.”

Investors Feel Pessimistic About Economy

In a sign that investors are worried about the state of the economy these days too, the most recent Wells Fargo/Gallup Investor and Retirement Optimism index fell by 9 points to 33 between February and May. The index has been tracking investor sentiments for some time now, and the current level compares unfavorably with such peaks as 95 in early 2007 and a stratospheric 155 in 2000.

Then again, that could merely mean that investors are a suggestible bunch, feeling optimistic when markets are high, and pessimistic when they are low. Investor euphoria at times of market highs have been well documented in the past, even if the cause of the market highs are bubbles that are about the pop.

Wall Street continued its downward trend on Monday, with the Dow Jones Industrial Average losing 61.3 points, or 0.5 percent. The S&P 500 and the Nasdaq lost a good deal more, 1.08 percent and 1.11 percent, respectively.