December 5, 2014
- U.S. employers were in a festive mood in November as the holiday season approached, hiring the most workers in any month in nearly three years. Job creation was deep and broadly distributed, benefiting nearly every sector. Although the unemployment rate remained unchanged, other indicators point to tightened labor market slack. This will place intensified pressure on wages and incomes in the months ahead, potentially leading to a modest increase in inflation that could spur the Federal Reserve to raise its benchmark lending rate in the spring.
- Private sector expansion merged with government payroll additions to yield a gain of 321,000 jobs last month. The hiring spree brings the 2014 year-to-date total to 2.65 million jobs — already outpacing the total jobs added in any calendar year since 1999. Retailers geared up for an anticipated rush of shoppers, adding more than 50,000 positions last month. The holiday season and the approach of the end of the year led to the hiring of nearly 23,000 temporary workers, largely to support retailers, warehouse order fulfillment and short-term year-end accounting needs. Natural resources and mining was the only sector not to expand, although oil and gas extraction payrolls grew nominally. The steady slide in oil prices has yet to show up in reduced oil production and field staffing.
- An increase in the labor force prevented the headline unemployment rate from dropping last month. However, the underemployment rate, which measures the unemployed plus individuals working part time for economic reasons and discouraged workers, fell an additional 10 basis points to 11.4 percent. A primary gauge of labor market slack, the underemployment rate plunged 170 basis points over the past year and resides well below the 17.2 percent level posted at the end of the recession nearly five years ago. Further declines will ensue as more workers recognize strengthening job prospects and re-enter the workforce, creating greater momentum for wages and incomes to rise.
Impact on Commercial Real Estate
- Financial services establishments added 20,000 workers in November, but 5,500 of the jobs were rental and leasing positions, some of which are involved in the lease-up and management of new multifamily properties. Multifamily construction spending has climbed steadily, but demand also continues to grow vigorously, particularly among younger households. As a result, U.S. apartment vacancy remains on course to end the year at 4.7 percent, 30 basis points lower than last year, as strong demand absorbs the 238,000 newly constructed rentals.
- Professional and business services staffing expanded by 86,000 workers in November, the largest gain in any sector. The addition of thousands of professional and business services workers is helping to backfill underutilized space in many office buildings and further gains in the months ahead will generate new space needs. This year, U.S. office vacancy will end the year at 15.3 percent, the lowest year-end level since 2008.
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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.