Grubb & Ellis Montana Commercial, LLC

It’s All About Jobs

November 13, 2009

 By now everyone has heard that the labor market is lagging the economic recovery, as it did following the last two recessions. Among the vast storehouse of economic information that researchers sift through every month, several data series stand out as leading indicators of job growth. Here are three, all of which are flashing green.

• Temporary help jobs began to decline in January 2007, seven months before the credit markets first seized up and 11 months before the recession began. They declined in 29 of the next 31 months. But temp jobs have risen in each of the last three months, which hasn’t happened since the last three months of 2006. Employers often reduce temp jobs at the first whiff of slowing demand and add them in advance of full-time positions when business starts to improve.
• Labor productivity grew an incredible (and unsustainable) 9.5 percent in the third quarter, its highest rate since the third quarter of 2003. Employers have been getting the maximum amount of output possible from their workers. Soon, they will need to add staff in order to keep up.
• Corporate profits have been resilient in the current downturn, helping the stock market bounce back sharply from its lows of last March. One reason is that employers have cut costs (and jobs) even faster than their revenues have fallen. Regardless of the reason, sturdy profits eventually create the conditions for job growth.

Here’s an interesting article from Business Week titled “America’s 25 Next Recovering Job Markets.”

 Robert Bach

SVP, Chief Economist

Grubb & Ellis

Bob Bach is our Senior Vice President, Chief Economist