Economy Watch: December Saw Stronger Job Growth, Apartment Vacancies Drop in '11

January 6, 2012
By Dees Stribling, Contributing Editor

Image courtesy Flickr user edenpictures

The U.S. economy added a relatively strong 200,000 jobs in December according to the Bureau of Labor Statistics on Friday. The unemployment rate dropped a bit to 8.5 percent. The numbers followed Thursday’s government report that initial jobless claims were down to 372,000 for the week ending Dec. 31.

The official report came after an optimistic report on private job creation released on Thursday by payroll specialist ADP. The company, whose numbers don’t always synch with the official report, said the economy created 325,000 private-sector jobs during the last month of the year, the strongest gain since December 2010. Small businesses (fewer than 50 employees) did the most hiring, adding 148,000 positions, while large companies (500 or more employees) hired only 37,000 people.

Outplacement consultancy Challenger, Gray & Christmas Inc. also reported on employment on Thursday. According to Challenger, planned job cuts totaled 41,785 in December, down from 42,474 in November and the lowest number in six months. But that total was still higher than in December 2010, when the planned job cuts were just above 32,000. For all of 2011, the job cut total was about 606,000, which at least compared well to 1.28 million in 2009.

Apartment Vacancies Drop Precipitously in ’11

Reis Inc. said on Thursday and apartment vacancies dropped 5.2 percent nationally during the fourth quarter of 2011, representing a 10-year low. The rate during the third quarter was 5.6 percent, while a year ago it was 6.6 percent, so clearly supply has not matched a vigorous demand among former homeowners, but more importantly, new households formed people in their 20s and 30s. Only 37,678 new units came on line nationwide in 2011, the lowest total since Ries started tracking the market in 1980.

Some markets are tighter than others, of course. According to Reis, New Haven, Conn., had an apartment vacancy rate of 2.1 percent, making it the tightest in the nation. At 2.4 percent, New York City’s apartment market is also quite tight. The property research firm added that average effective rents rose 0.5 percent nationally during the fourth quarter, while asking rents rose 0.4 percent. San Francisco saw the largest increase in effective rents quarter-over-quarter, up 1.7 percent.

Will 2012 also be a good year for apartment landlords? Probably so, since the development cycle is such that new supply might not have a chance to meet demand until at least 2013. “By 2013 the influx of new units may begin eroding any benefit the sector derives from tight supply conditions,” Reis’ head of research, Victor Calanog, noted in the report.

ISM Non-Manufacturing Index Ekes Out Increase

The Institute for Supply Management reported on Thursday that its Non-Manufacturing Index registered 52.6 percent in December, 0.6 percentage points higher than in November, indicating continued growth at a slightly faster rate in the non-manufacturing sector. A reading above 50 percent indicates expansion; below 50 percent would mean that the non-manufacturing sector is generally contracting.

According to the NMI, 11 non-manufacturing industries, including retail, finance, and–surprisingly, public administration and construction–reported growth in December, though economic growth continues to be slowed by the lag in employment. Seven industries reported contraction, including health care, real estate, lodging and utilities.

Wall Street had another uncertain day on Thursday ahead of the official jobs numbers. The Dow Jones Industrial Average lost 2.72 points, or a scant 0.02 percent. On the other hand, the S&P 500 gained 0.29 percent and the Nasdaq was up 0.81 percent.