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April 2017 U.S. employment update and outlook

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March fell below expectations with 98,000 net new jobs, but unemployment dropped to a cyclical low of 4.5 percent as labor-force expansion slowed.

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April 2017 U.S. employment update and outlook

  1. 1. National employment situation: March 2017 April 7, 2017
  2. 2. March 2017 U.S. labor market at a glance 2 +98,000 (78 consecutive months of growth) 1-month net change +2,185,000 (+1.5% y-o-y) 12-month change +795,000 10-year average annual growth 4.5% Unemployment rate 5,626,000 (-1.5% y-o-y) Job openings -50bp 12-month change in unemployment 63.0% Labor force participation rate 5,440,000 (+6.3% y-o-y) Hires 3,220,000 (+11.3% y-o-y) Quits Source: JLL Research, Bureau of Labor Statistics
  3. 3. After two strong months, March disappoints January and February both exceeded the 200,000-job threshold, while March fell well below expectations with only 98,000 net new jobs. A contraction in retail trade and slowdowns in all major sectors with the exception of professional and business services (PBS) were the primary drivers of this, compounded by volatility due to tightening and employment growth continuing to exceed the rate of labor-force expansion. Although March’s monthly growth did not meet consensus figures, the broader trend remains positive and future months will dictate whether this is an anomalous month or a broader shift in growth rates. Unemployment drops, but slack is beginning to run out Counter to job growth, unemployment metrics improved once again, with the unemployment rate dropping by another 20 basis points to a cyclical low of 4.5 percent. Total unemployment fell below the 9.0-percent threshold for the first time since 2007 and now stands at 8.9 percent. With unemployment already low, the slowing rate of labor-force expansion (0.5 percent annually compared to total non-farm job growth of 1.5 percent) will present a challenge for employers seeking to increase headcounts, particularly as unemployment for bachelor’s-degree holders remains steady at 2.5 percent. Confidence is up even as inflation ramps up The consumer confidence index spiked in March to 125.6 points, its highest figure since 2000. Business confidence metrics have also showed optimism, indicating further economic growth ahead. The acceleration in inflation to 2.7 percent – now at the same rate as wage growth – may begin to affect consumer spending, however, but tightening labor-market conditions will likely push wages up further. March 2017 U.S. labor market highlights 3Source: JLL Research, Bureau of Labor Statistics
  4. 4. 360,000 226,000 243,000 96,000 110,000 88,000 106,000 122,000 221,000 183,000 164,000 196,000 360,000 226,000 243,000 96,000 110,000 88,000 160,000 150,000 161,000 225,000 203,000 214,000 197,000 280,000 141,000 203,000 199,000 201,000 149,000 202,000 164,000 237,000 274,000 84,000 166,000 188,000 225,000 330,000 236,000 286,000 249,000 213,000 250,000 221,000 423,000 329,000 221,000 265,000 84,000 251,000 273,000 228,000 277,000 150,000 149,000 295,000 280,000 262,000 168,000 233,000 186,000 277,000 24,000 271,000 252,000 176,000 208,000 135,000 164,000 155,000 216,000 219,000 98,000 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 2011 2012 2013 2014 2015 2016 2017 1-monthnetchangeAfter a strong start to 2017, March saw only 98,000 net new jobs, while downward revisions hit Jan. and Feb. Source: JLL Research, Bureau of Labor Statistics 4
  5. 5. 0% 2% 4% 6% 8% 10% 12% -1,000 -800 -600 -400 -200 0 200 400 600 Unemploymentrate(%) 1-monthnetchange(thousands) 1-month net change Unemployment rate Unemployment fell to its lowest rate this cycle (4.5 percent) on the back of further labor-market tightening 5Source: JLL Research, Bureau of Labor Statistics
  6. 6. 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 Jobopenings(thousands)Job openings show modest increase over the month, surpassing 5.6 million 6Source: JLL Research, Bureau of Labor Statistics
  7. 7. 2.1% 2.3% 2.9% 3.0% 3.4% 3.9% 4.3% 4.5% 4.7% 5.2% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Construction Mining and logging Manufacturing Information Trade, transportation and utilities Other services Leisure and hospitality Financial activities Education and health Professional and business services Job openings rate (%) The rate of job openings across sectors has remained largely stable, although financial activities has risen 7Source: JLL Research, Bureau of Labor Statistics
  8. 8. -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 12-month%change Wage growth Inflation Inflation has now caught up with wage growth, which may begin to squeeze consumer spending 8Source: JLL Research, Bureau of Labor Statistics
  9. 9. 1.8% 1.9% 1.9% 2.1% 2.4% 2.5% 2.6% 3.5% 4.0% 4.4% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Education and health Trade, transportation and utilities Mining and logging Financial activities Construction Manufacturing Other services Professional and business services Information Leisure and hospitality 12-month wage growth (%) Office-using sectors registered above-average rates of wage growth after a temporary slowdown 9Source: JLL Research, Bureau of Labor Statistics
  10. 10. 62% 63% 63% 64% 64% 65% 65% 66% 66% 67% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 12-month%changeThe labor force participation rate showed no sign of change in March at 63.0 percent 10Source: JLL Research, Bureau of Labor Statistics
  11. 11. -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 12-month%change Civilian labor force Employment The rate of labor force expansion continues to slow, posing further difficulty for employers 11Source: JLL Research, Bureau of Labor Statistics
  12. 12. -29.7 -3.0 -0.7 -0.4 0.0 1.0 3.0 3.5 6.0 9.0 9.0 9.0 10.5 11.0 11.0 11.0 16.0 16.7 56.0 -40 -30 -20 -10 0 10 20 30 40 50 60 70 Retail trade Information Utilities Wholesale trade Nondurable goods Other services Motor vehicles and parts Transportation and warehousing Construction Financial activities Government Leisure and hospitality Temporary help services Mining and logging Durable goods Manufacturing Education and health services Health care and social assistance Professional and business services 1-month net change (thousands) Professional and business services was the only major sector that did not record a slowdown in March 12Source: JLL Research, Bureau of Labor Statistics
  13. 13. -32.0 -1.5 1.0 3.0 9.3 36.0 37.0 46.4 54.0 58.5 88.7 110.2 152.0 177.0 178.0 258.0 437.0 527.0 639.0 -100 0 100 200 300 400 500 600 700 Information Utilities Durable goods Mining and logging Motor vehicles and parts Nondurable goods Manufacturing Wholesale trade Other services Retail trade Transportation and warehousing Temporary help services Government Construction Financial activities Leisure and hospitality Health care and social assistance Education and health services Professional and business services 12-month net change (thousands) Mining and logging has returned to growth on an annual basis after a sharp contraction 13Source: JLL Research, Bureau of Labor Statistics 639.0 527.0258.0 178.0 58.5 487.5 PBS Education and health Leisure and hospitality Financial activities Retail trade Manufacturing All other jobs Core subsectors added 77.7 percent of all jobs over the past 12 months.
  14. 14. 0% 1% 2% 3% 4% 5% 6% 12-month%changeUnemployment for bachelor’s degree holders at 2.5 percent, consistent with 2015 levels 14Source: JLL Research, Bureau of Labor Statistics
  15. 15. -300 -250 -200 -150 -100 -50 0 50 100 150 200 2009 2010 2011 2012 2013 2014 2015 2016 2017 1-monthnetchange(thousands) Professional and business services Financial activities Information A third consecutive month of contraction in information is beginning to drag down office-using growth 15Source: JLL Research, Bureau of Labor Statistics
  16. 16. -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 12-month%change Tech Energy, mining and utilities Office-using Total non-farm Tech’s slight bump to 4.9-percent growth held up, but remains below 2015 highs 16Source: JLL Research, Bureau of Labor Statistics
  17. 17. 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000 700,000 Initialunemploymentclaimsperweek Intial weekly claims 4-week moving average Initial unemployment claims remain on a downward trend despite already being at cyclical lows 17Source: JLL Research, U.S. Department of Labor
  18. 18. 0 20 40 60 80 100 120 140 ConsumerconfidenceindexConsumer confidence is soaring even as inflation rises and now strongly exceed their previous peak 18Source: JLL Research, Conference Board
  19. 19. All metro areas exceeding 3.0-percent job growth except for Salt Lake City are in the Sun Belt 19 3.1% 3.2% 3.6% 3.7% 3.9% 3.9% 4.3% 2.5% 3.0% 3.5% 4.0% 4.5% Salt Lake City Charlotte Atlanta Dallas Jacksonville Nashville Orlando 12-month % change Source: JLL Research, Bureau of Labor Statistics
  20. 20. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 12-month%change Total unemployment 10-year average Total unemployment dropped to 8.9 percent, the first time below 9.0 percent since 2007 20Source: JLL Research, Bureau of Labor Statistics
  21. 21. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 21 Phil Ryan Phil.Ryan@am.jll.com 202 719 6295

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