Weak Jobs Report Hangs Over Housing Markets

Job growth slammed into a wall last month, with employment figures dropping and the number of jobless rising ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a grim indication that the housing markets may lose steam, according to analysts.

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According to ""CNNMoney"":http://money.cnn.com/2011/07/08/news/economy/june_jobs_report_unemployment/index.htm?hpt=hp_t1, the economy added only 18,000 new jobs in June, falling short of expectations that data would trump the 25,000 jobs brought on in May. ""CNN"":http://www.cnn.com/ reported that job losses missed a threshold that hit a moderate high in September last year.

Numbers for job loss in April and May also hit 9.2 percent and 9.1 percent, with economists saying that the market still needs a net gain of about 150,000 jobs.

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Supplementing the figures, a recent report by ""Capital Economics"":http://www.capitaleconomics.com/ forecasts that overall GDP will slow from approximately 2.5 percent this year to 2 percent in 2012.

With job growth trending downward, analysts worry that home sales and construction activity, the pillars of the housing market, may follow suit.

""Job creation is connected to new construction activity, which historically has a strong correlation to job growth,"" said Jonathan Smoke, executive director of research at ""Hanley Wood Market Intelligence"":http://www.hwmarketintelligence.com/v4/default.asp. ""Most markets around the country have a relationship between 1.1 to two jobs where new home permits are started.

""When there are job losses, clearly that throws things into disequilibrium,"" he says.

In a sign that housing may see more than losses in jobs, the ""Commerce Department"":http://www.commerce.gov/ reported that only 523,000 homes went up on a seasonally adjusted basis around the country in May. Single-family home building, which accounts for 80 percent of industry activity, plummeted by 11 percent over the same period, reflecting an industry that continues to crawl.

""What we've seen is that people who have jobs are fairly confident about keeping their jobs, even though weekly unemployment numbers are higher than what we want,"" says Jay Brinkmann, chief economist and SVP for research and economics at the ""Mortgage Bankers Association"":http://mbaa.org/default.htm. ""Ultimately recovery will happen when we see new housing construction.""