May’s employment numbers released today by the U.S. Department of Labor come as no surprise to economists. The government reports that the unemployment rate rose from 5% in April to 5.5% in May, with non-farm payrolls down by 49,000 jobs.
Hessam Nadji, Marcus & Millichap’s managing director for research services, says that while the loss of about 50,000 jobs is not surprising, losses in this downturn continue to be below the level of losses in other periods of economic weakness.
“Typically at this point in a recession — if we were in a recession — we would be losing somewhere between 100,000 to 150,000 jobs a month. Job losses in the last five months have averaged a lot less than that this time around,” he notes.
Nadji believes this is because the economy added fewer jobs during the most recent period of economic growth. In fact, job growth during the last expansion was at its weakest since 1958, according to Nadji, since employers used productivity growth to boost output without adding to payrolls.
He expects the economy to continue to lose fewer jobs over the upcoming months, but doesn’t see any driver for major growth. “The recovery will be lackluster, too,” says Nadji.
In the commercial real estate arena, there will be fewer tenants looking to expand. Since the fall of 2007, tenants have been on the sidelines and Nadji expects them to continue to be cautious for another quarter or two.
Rajeev Dhawan, an economist at Georgia State University and director of the university’s Economic Forecasting Center, sees the May employment numbers as confirming the fact that “the economy is in the middle of a recessionary period,” which is not much of a surprise.
“The only surprise is that it [unemployment] is not a bigger negative number than some might have expected. It wasn’t very big and that’s the positive surprise,” Dhawan says.