Plodding Employment Recovery Remains On-Track

April 5, 2013

  • Though job creation remained positive last month, its loss of momentum reiterated weakening performance in both initial unemployment claims and mass layoffs. Employers made only modest additions to payrolls last month, and the slowdown has renewed debate regarding the effects of the sequester, increased payroll taxes, and the Affordable Care Act. The disappointing job numbers also dull some of the luster created by positive housing trends and the strengthened auto sector. Despite a modest decline in the unemployment rate, renewed concerns over the job market will almost certainly encourage the Federal Reserve to maintain its accommodative policies to support economic growth.

  • Private sector employers added 95,000 jobs last month, down from the upwardly revised total of 268,000 positions in February. The loss of 7,000 government positions last month yielded a net gain of just 88,000 jobs, the lowest total since last June. The professional and business services sector led the gains, adding 51,000 workers, while education and health services gained 44,000 positions. However, the retail sector shed 24,100 jobs in March, the most significant one-month loss for this sector in more than a year. Although retail sales continue to increase, higher payroll taxes may be eroding shopping sufficiently to force retailers to tighten staffing. Another risk to employment in coming months is the sequester, but the implications of these spending cuts have yet to appear in the jobs data.

  • Construction employment emerged as a bright spot in March and throughout the entire first quarter. Building trades added 18,000 positions last month and 91,000 spots in the first three months of 2013, the highest quarterly job growth in seven years. Construction spending continues to rise, as evidenced by new apartment buildings and single-family developments coming out of the ground across the country. Although home building and single-family home sales remain well below levels recorded before the recession, the resurgence of housing could potentially offset weakness in industries dependent on government spending and help drive economic growth this year.

Impact on Commercial Real Estate

  • The addition of 504,000 jobs last quarter boosted demand for rental housing and supported tightening concessions. Still, apartment construction is on the upswing as developers seek to capitalize on young households’ preferences for rentals over homeownership. The convergence of rising demand with increased supply will support a national apartment vacancy rate of 5 percent in 2013, down 10 basis points from last year.

  • Full-time office-using employment sectors created 33,700 positions in March and nearly 163,000 jobs in the first quarter, primarily in professional and business services. Financial services and information employment continue to grow at only a nominal pace, but the overall increase in office jobs bodes well for the national office sector in the months ahead. With construction of office properties limited, existing spaces will absorb new demand, supporting a 90-basis point drop in vacancy to 15.6 percent during 2013.

The Research Brief blog from Marcus & Millichap offers timely insight and expertise into the rapidly changing investment real estate industry. The Research Brief is published weekly by top industry professionals, showcasing time-sensitive information and valuable analysis. Add the Research Brief blog to your reading list today. Follow Marcus & Millichap Research Services on Twitter! 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.


  1. Posted April 5, 2013 at 11:05 pm | Permalink | Reply


  2. Posted April 5, 2013 at 11:25 pm | Permalink | Reply

    Hi Marcus and Millichap,

    Thanks for the report. Very interesting data. See you at the ICSC in Las Vegas in May 2013!!

    (760) 479-0800

    Chris Marabella

  3. Posted April 5, 2013 at 11:27 pm | Permalink | Reply


    Didn’t government spending go up 6% in the third quarter of 2012? I think it is going down now? Election years are always good.

    Thanks for your feedback.

    (760) 479-0800

    Chris Marabella

  4. Daniel Bani
    Posted April 6, 2013 at 6:58 am | Permalink | Reply

    There Are lies dam lies And statistics
    The authors o this article le have done a great job in minimizing the true extent of this painfull employment picture by quoting quarterly data instead of monthly data, as in the good old days!!!
    It is a shame that even professionals are in wishfull la la land!!
    Structural Changes like tax reform, un leaching the capitalists is the only way out of this mess!!! The present policies will not only yield no real change to unemployment, but will also drag all to the same low low level. My heart bleeds for this wonderfull US OF A

  5. Posted April 20, 2013 at 4:49 pm | Permalink | Reply

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