First, the September jobs report released this morning by the Bureau of Labor Statistics came in better than expected with payrolls expanding by 103,000 last month while July and August totals were revised higher by a combined 99,000. Government shed 34,000 jobs last month, and private sector employers added 137,000 led by professional and business services (+48,000), education and health services (+45,000) and information (+34,000), although the latter sector was inflated by the return of 45,000 striking Verizon workers to the labor force. Also worth noting: retailers added 13,600 jobs, suggesting they have an optimistic outlook for consumer spending. Other details: the unemployment rate was unchanged at 9.1 percent, average weekly hours rose 0.1 percent and average hourly earnings were up 4 cents. While the September report is good news compared with last month’s preliminary report that zero jobs were created in August, the labor market is still not growing fast enough to begin absorbing the nation’s long-term unemployed.
Secondly, the numbers for commercial real estate have been looking better than warranted by recent economic data. In our second quarter “Office Market Trends” report, we asked: “Was the surprising second quarter absorption a delayed response to the stronger economy earlier in the year, or could it be that businesses, especially large and profitable ones, are more willing to take on multi-year space commitments than the recent economic data would suggest?” Our preliminary third-quarter office data supports this thesis. Absorption last quarter totaled 13.6 million square feet, better than Q2 and in line with a normal office market recovery, and the vacancy rate fell by a healthy 40 basis points to 16.9 percent. (Our final numbers will be out next week.) We are seeing a similar trend in the industrial market (click here), and B of A Merrill Lynch analysts noted that same-store sales in their universe of retail REITs are stronger than the economic news would suggest (click here). Last month’s growth in jobs, hours worked and earnings should provide some support for consumer spending going into the holiday season.
Lastly, take a look at “Happy Talk,” economist Jeff Thredgold’s semi-annual report on the positive trends in the economy and society. You will come away with a renewed sense of why some recent polls have it wrong: your kids will be better off than you. (Thanks to Bill Jenkins at Thermo Fisher Scientific for passing this along.) Jeff also wrote “On the One Hand…”, the indispensable joke book for economists, containing gems such as: “An economist is someone who didn’t have enough personality to become an accountant.” Sad, but true.