Daily Forecast Update: Employment Report

June 5, 2009

By Jessica Lautz, Research Economist 

Employment Report

• Job losses fell in May with another 345,000 jobs shed. Nearly half as many jobs were lost in May then in the previous six months.
• Job cuts have brought the unemployment rate up to 9.4 percent, the highest level since August of 1983.
• Total job losses since the beginning of the recession in December of 2007 now total 6 million.
• The number of long-term unemployed (for 27 weeks or more) increased by 268,000 to 3.9 million in May.
• Steep job losses continued in manufacturing however declines moderated in construction and the health care sector added jobs. Job losses in the construction and manufacturing sectors have been the hardest hit by the recession.

What does today’s data mean for REALTORS® and consumers?

• The pace of job losses was nearly cut in half in May in comparison to the prior six months of job losses. This could be an indication that the worst is over, however historically employment is a lagging indicator, especially coming out of a recession. The previous recession showed job losses continued through the next year after the recession had ended.
• Job losses are expected to rise in the manufacturing sector throughout the year, however the decelerated drop in construction job losses is a positive turn for the economy.
• Additionally, the high unemployment rate is predicted to grow throughout the year to 10.4%, however this does not take into account the rate of underemployed, which is also rising.
• It is important to keep in mind that job cuts of above figures are net changes. Even during a difficult recession, there are constant turnovers in the labor market.

Daily Forecast Update

• NAR's monthly official forecast as of June 2
• GDP Q2: -1.2%
• GDP Q3: +0.6%
• GDP Q4: +1.0%
• Unemployment rate by the end of 2009: 10.4%
• Average 30-year fixed mortgage rate by the end of 2009: 5.5%

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