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Context of 'July 8, 2009: US Apartment Vacancy Rate at Record 22 Year High in Second Quarter 2009'

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According to a recent Manpower, Inc. survey, US employers’ plans to hire for the third quarter of 2009 are at a record low, and the jobless will have to wait many months more before finding a job. The agency reported that after they adjusted results for seasonal employment variations, its employment gauge for July through September 2009 was negative. In a statement released to media, Jonas Prising, president of Americas for Manpower, says employers are “treading slowly and watching with guarded optimism, hoping a few quarters of stability will be the precursor to recovery.” The report underlines economists’ predictions that unemployment will continue to climb even if layoffs subside. Recent Labor Department statistics reported a loss of 345,000 US jobs in May. Although less than the job losses recorded in the last eight months, the May 2009 jobless rate surged to its highest level in nearly 26 years. In a repeat of results from the two previous periods, 67 percent of employers anticipated zero change in third quarter 2009, Manpower says. Those who expected to boost their payrolls remained at 15 percent for a second time in a row, while those projecting additional job cuts fell to 13-14 percent. “While the numbers may not be as optimistic as we would like, it is positive to see no further deterioration,” says Jeffrey Joerres, Manpower’s chairman and chief executive officer. Six of 13 industries employers surveyed estimated better employment conditions than in the second quarter, with gains in leisure, hospitality, wholesale, and retail trades, while those in construction stated they would add staff for the first time in a year. The biggest hiring corrosion occurred in education, health services, and at government agencies. In three of four regions, the net employment gauge measured negative, and was zero in the Northeast. The measurement improved in the South, dropped in the West, and was little changed in the Northeast and Midwest. Net employment gauge figures are tallied by subtracting the percentage of employers that predict an employment decrease from those that foresee an increase. Manpower’s global outlook survey demonstrated that the net employment gauge for third quarter 2009 improved in 12 countries from the previous three months. Plans for hiring were strongest in India, Norway, and Poland. The Manpower Inc. survey is a quarterly measurement with a margin of error of plus or minus 0.49 percentage point in the US. The employment agency interviewed over 28,000 US employers for its national outlook and surveyed 70,000 companies for its third quarter global measurement. Manpower Inc. is billed as the largest temporary workers employment agency in the world. [Bloomberg, 6/9/2009]

Entity Tags: US Department of Labor, Jonas Prising, Jeffrey Joerres, Manpower Inc.

Timeline Tags: Global Economic Crises

Eighteen consecutive months of job losses and an economy on the verge of collapse have left record numbers of US consumers either unable to pay their debts or chronically late in payments during the first quarter of 2009. According to the American Bankers Association, home equity loan delinquencies rose to 3.52 percent, from 3.03 percent of all accounts in the last quarter of 2008. Late payments on home equity credit lines climbed a record 1.89 percent, and an index of eight types of loans rose to 3.23 percent from 3.22 percent for a fourth consecutive quarter. In a telephone interview with Bloomberg, the American Bankers Association’s chief economist, James Chessen says: “The number one driver of delinquencies is job losses, which we’ve seen build and build. Delinquencies won’t come down without a dramatic improvement in the economy, and businesses will have to start hiring again.” For the first quarter of 2009, the US economy lost an average of 691,000 jobs in each of the quarter’s three months. According to a Bloomberg survey of 61 economists, since the recession began in December 2007, more than 6.5 million jobs have been cut, and the US economy will shrink in 2009 the most since 1946. Outstanding debt on bank card delinquencies rose a record 6.60 percent in first quarter 2009, from 5.52 percent in the fourth quarter of 2008, indicating that unemployed borrowers are relying on bank cards, as housing prices corrode their home equity. The ABA stated that more borrowers are using cards to meet daily expenses following their job losses. US banks distributed 9.8 million credit cards from January through April 2009, a 38 percent decline from the same period a year earlier, with the average limit for a new bank card falling 3 percent to $4,594, according to data released by credit reporting agency Equifax. “There is less equity to draw on and certainly financial institutions have been scaling back the available lines of credit,” Chessen says. [Bloomberg, 7/7/2009; American Bankers Association, 7/7/2009]

Entity Tags: James Chessen, American Bankers Association (ABA)

Timeline Tags: Global Economic Crises

The second quarter of any year is generally considered peak leasing season in the US, but reports show that during the second quarter of 2009, the apartment vacancy rate rose to a 22-year high because of rising unemployment that decreased apartment rental demand. Rents plunged fastest in markets such as New York and San Jose, California, where many white collar jobs have been lost. Additionally, markets such as Las Vegas and Orange County, California, that have transformed foreclosed homes and condominiums into rental property also suffered a decrease in vacancies. Nationally, vacancy levels rose from 6.1 percent in 2008 to 7.5 percent in the April to June 2009 period. Victor Calanog, Reis’s director of research, says: “Everyone expected spring leasing to save apartment landlords. That hasn’t happened.” Initially, the housing catastrophe offered property owners a chance to entice distressed homeowners into the leasing market, but job losses occurred at such a rapid pace that any increases that apartment leasing might have garnered from the housing crisis were destroyed. The rise in apartment vacancies began at the end of 2007, further quickening with the worsening of the economy in fall 2008. Meantime, rents have continued to fall at the swiftest pace in more than a decade and effective rents—concessions by landlords such as a month’s free rent—fell 1.1 percent in first quarter 2009 and 0.9 percent in the second quarter, and averaged $975 per month. At 5.8 percent, New York City marked the largest 12-month rent decrease with an average of $2,680 per month. Statistics are based on a survey by Reis Inc., a New York real estate research firm, which tracked 79 markets, of which 45 showed vacancy increases. [Wall Street Journal, 7/8/2009]

Entity Tags: Victor Calanog, Reis Inc.

Timeline Tags: Global Economic Crises

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