March 11, 2014
Once again displaying surprising resiliency and underlying strength, U.S. employers shook off weather-related disruptions last month to add workers at a solid pace. Gains occurred in nearly all employment sectors, dispelling doubts that staffing levels in a number of industries would suffer as businesses temporarily closed and workers stayed home. Continuing growth in payrolls will be one factor encouraging the Federal Reserve to adhere to its strategy of reducing monthly bond purchases.
- U.S. employers added 175,000 jobs last month, including 162,000 positions in the private sector. Among the private-employment sectors, only information services, dominated by media publications and newspapers, failed to record a gain. Professional and business services led the increase in payrolls, hiring 79,000 workers, while a sizable gain was also recorded in education and health services. Despite supply chain and production disruptions arising from adverse weather, manufacturers added 6,000 jobs last month, primarily in durable goods segments transportation and machinery. Growth in these segments points to greater spending by consumers seeking to replace older vehicles and an increase in capital spending by businesses. With the rise in private sector payrolls last month, more than 98 percent of the positions cut during the recession have been recovered. The pre-recession peak of private-sector employment will soon be surpassed.
- Construction employment continues to stage a comeback, as 15,000 positions were added last month and gains were posted in 10 of the past 12 months. The increase in building trade payrolls last month was fueled by the addition of 12,300 heavy construction and civil engineering positions, indicating that state and local governments are proceeding with capital improvement projects delayed by the economic downturn. Residential contractor payrolls rose for the ninth consecutive month in February, reflecting the recovery in homebuilding. Multifamily construction is especially robust, with approximately 215,000 new units slated for completion this year – the highest level since 2000.
Impact on Commercial Real Estate
The multifamily sector remains the strongest of the commercial property sectors. Nationwide, vacancy declined 10 basis points in 2013, but rising completions will push up the rate 20 basis points this year to 5.2 percent. Several markets have a considerable development pipeline slated for delivery this year, including the Texas metros, Washington, D.C., and Seattle. Because development will be concentrated in core areas of some of the strongest employment markets, few cities will face significant rise in apartment vacancy rates during 2014.
- Operating conditions in the retail sector will further improve as the strengthened job market buoys consumer confidence and spending. Retail construction remains constrained, and generally consists of single-tenant concepts or significantly pre-leased small multi-tenant properties. As space demand builds momentum over the course of the year, the nationwide vacancy will slip 70 basis points to 6.5 percent, and average rents will advance 2.5 percent.
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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.