Economist's Commentary: July 3, 2008

Quick Take on the Economy: July 3, 2008

By Lawrence Yun, NAR Chief Economist

The U.S. lost 62,000 net payroll jobs in June according to the Labor Department. The unemployment rate was steady at 5.5 percent following a big jump in the prior month.
Jobs have been lost for the sixth straight month. Cumulatively, there are now 438,000 fewer jobs in America than since the beginning of the year.
The construction industry has lost more jobs than any other sector over the past 12-months and that trend continued in June with 43,000 job cuts in the sector as homebuilders sharply cut back production. Over ½ million jobs have been cut in construction since the peak about 2 years ago.
Manufacturing jobs continue to disappear with an additional 33,000 layoffs in June. Job losses have been occurring for essentially 10 straight years since 1998. There are 4 million net fewer jobs in manufacturing - mostly in the Midwestern states.
Health care, education, government, mining (from the commodity boom), and leisure/hospitality sectors posted job gains.
A separate household survey (asking people - not companies - if they have jobs) also showed far fewer jobs. Household employment fell by 155,000 during the month. However, fewer people entered the labor force and were looking for jobs. Therefore, the unemployment rate did not rise despite fewer job holders.
Average wages rose by 6 cents to $18.01 an hour. That increase translates into a 3.4 percent gain over the 12 months, which is below the consumer price increase of 4.4 percent.

The weekly data on unemployment claims also deteriorated. There were 404,000 people filing for claims for the first time. Above 400,000 is not a good sign as that implies further net job cuts unless hirings rise sufficiently to offset this high number of layoffs.
There is a slight indication that hirings may be picking up. The total number of people who are receiving unemployment checks fell by 18,000.

The Institute of Supply Management's index for non-manufacturing service sector weakened in June. The latest read of 48.2 is a decline from 51.7 in the prior month.
A reading of below 50 signals a contraction in the sector.

The job market is deteriorating further. The housing downturn has been the primary culprit.
The housing market stimulus bill that is in Congress clearly needs to pass in order to help stabilize the economy.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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