July 7, 2015
- The U.S. job market continued its consistent pace of hiring in June, offering evidence that the economy maintained a moderate growth rate in the second quarter. Unemployment and underemployment dipped last month to their lowest level in seven years. Though part of the tightening is attributable to stable hiring, the declines were largely driven by a drop in the labor force, the share of employable people working or seeking a job. Decreases in the labor force are not uncommon. In recent months, young adults in particular appeared to favor charitable work and unpaid internships for the summer. Modest wage gains and a dip in the participation rate will likely have little effect on the Federal Reserve’s stance on a rate hike, and a modest adjustment remains probable in September.
- U.S. employers created 223,000 jobs last month, all in the private sector. Goods-producing segments lagged in June, but 64,000 professional and business services positions fueled growth in the service sector. Also, hiring for new stores drove most of the increase in trade employment of 49,000 workers in June. Outside of the service sector, construction payrolls were flat last month. Shortages of skilled workers are limiting hiring, while many firms that emerged from the recession are using greater discipline to manage growth.
- More than 1.2 million jobs were created in the first six months of 2015, less than the 1.4 million posts added in the first half of last year. Much of the drop comes from the 70,000 jobs cut thus far during 2015 in natural resources and mining due to lower oil prices. Rig counts have stabilized recently, suggesting that the most severe job cuts have ended. Likewise, manufacturers hired 91,000 workers in the initial six months of 2014, but the stronger dollar has eroded exports 3 percent from last year, and as a result, manufacturing hiring in 2015 fell to less than half of last year’s pace. Other employment sectors have grown at a faster rate thus far in 2015, led by education and health services. Financial services also made 78,000 new hires so far in 2015, outpacing the 54,000-worker gain in the corresponding span last year.
- Amid ongoing additions to payrolls, the U.S. office sector carries significant momentum into the second half of 2015. Rising needs for larger spaces to accommodate expansions, plus subdued construction, will drive down vacancy 80 basis points this year to 14.5 percent. Limited competition from new buildings will yield greater pricing power to property owners, supporting a 4.1 percent jump in the average rent nationwide this year.
- Steady job growth in the first half supported a 60-basis-point decline in U.S. apartment vacancy to 4.1 percent at midyear. Despite significant construction the last two years, lower vacancy is a strong sign that the apartment sector faces few oversupply risks this year. More than 100,000 additional apartments were occupied in the second quarter alone, easily exceeding the completion of 56,000 rentals. Construction will remain elevated, but it’s concentrated in a handful of major markets where pockets of high-end rentals could face lease-up hurdles in the second half of 2015. Outside these core areas, the performance outlook remains exceptionally positive.
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The information contained herein was obtained from sources deemed reliable. Every effort was made to obtain complete and accurate information; however, no representation, warranty or guarantee to the accuracy, express or implied, is made.