Jones Lang LaSalle
Foundation Crack
By MICHAEL CORKERY
June 20, 2006; Page C1
Here's some troubling news from the home front. As the housing market cools, KB Home, the giant Los Angeles builder, says it has laid off some 7% of its workers. KB had been expecting the housing market to grow another 20% to 30% through next year, says CEO Bruce Karatz. When that didn't materialize, it started letting go of workers in places like Nevada and Arizona.
With each passing day, it seems, a key piece of the economy's foundation gets a little more wobbly.
The housing boom provided important fuel for the job market the past few years. The real-estate sector has been associated with roughly 20% of the four million payroll jobs created in the U.S. economy in the past two years, according to Moody's Economy.com, a research firm. That includes positions ranging from residential-construction jobs and real-estate agents to title insurers and workers at Home Depot.
If that source of growth disappears, it might not cripple the economy, but it will probably be felt.
Today, the Commerce Department gives a broader read on how much pain the home builders are facing. Economists expect the Commerce Department to report that builders started new projects at an annual rate of 1.88 million units in May. That would be up after starts tumbled to a 1.85 million-unit rate in April, but down 8% from a year ago.
"It's unlikely the home-building industry is going to be the savior of job growth, at least over the next six months," says Mr. Karatz. Lenders like Ameriquest and Washington Mutual also have announced layoffs.
KB Home is in better shape than many other builders. Its second-quarter net income rose 14%, though it said orders are dropping. According to the National Association of Home Builders index, optimism in the industry is at its lowest level in more than a decade.
The overall job market still looks pretty healthy. Jobless claims filed by workers, for instance, last week dropped to less than 300,000, generally a mark of a robust labor market. But if the economy is going to keep producing jobs, it looks increasingly like it will need some fresh new legs to stand on.
Write to Michael Corkery at michael.corkery@wsj.com
Foundation Crack
By MICHAEL CORKERY
June 20, 2006; Page C1
Here's some troubling news from the home front. As the housing market cools, KB Home, the giant Los Angeles builder, says it has laid off some 7% of its workers. KB had been expecting the housing market to grow another 20% to 30% through next year, says CEO Bruce Karatz. When that didn't materialize, it started letting go of workers in places like Nevada and Arizona.
With each passing day, it seems, a key piece of the economy's foundation gets a little more wobbly.
The housing boom provided important fuel for the job market the past few years. The real-estate sector has been associated with roughly 20% of the four million payroll jobs created in the U.S. economy in the past two years, according to Moody's Economy.com, a research firm. That includes positions ranging from residential-construction jobs and real-estate agents to title insurers and workers at Home Depot.
If that source of growth disappears, it might not cripple the economy, but it will probably be felt.
Today, the Commerce Department gives a broader read on how much pain the home builders are facing. Economists expect the Commerce Department to report that builders started new projects at an annual rate of 1.88 million units in May. That would be up after starts tumbled to a 1.85 million-unit rate in April, but down 8% from a year ago.
"It's unlikely the home-building industry is going to be the savior of job growth, at least over the next six months," says Mr. Karatz. Lenders like Ameriquest and Washington Mutual also have announced layoffs.
KB Home is in better shape than many other builders. Its second-quarter net income rose 14%, though it said orders are dropping. According to the National Association of Home Builders index, optimism in the industry is at its lowest level in more than a decade.
The overall job market still looks pretty healthy. Jobless claims filed by workers, for instance, last week dropped to less than 300,000, generally a mark of a robust labor market. But if the economy is going to keep producing jobs, it looks increasingly like it will need some fresh new legs to stand on.
Write to Michael Corkery at michael.corkery@wsj.com
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