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July 2016 U.S. employment update and outlook

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June saw 287,000 net new jobs added to the U.S. labor market, a return to healthy growth after a weak May that saw gains revised downward to just 11,000 jobs. This is the highest monthly figure in eight months.

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July 2016 U.S. employment update and outlook

  1. 1. U.S. employment situation: September 2013 Release date: October 22, 2013 The labor market bounced back in June, but slack is diminishing U.S. employment situation: June 2016 July 8, 2016
  2. 2. June 2016 employment summary • Employment growth returns with strength after a very weak May - June saw 287,000 net new jobs added to the U.S. labor market, a return to healthy growth after a weak May that saw gains revised downward to just 11,000 jobs. This is the highest monthly figure in eight months and will be reassuring to decision makers such as the Federal Reserve. - A 414,000-person increase in the labor force brought participation to 62.7 percent and pushed up unemployment slightly to 4.9 percent. Still below the 5.0 percent threshold, unemployment is beginning to approach its cyclical low and is already “full” for white-collar workers. - Job growth was broad-based, although non-office industries such as health, leisure and hospitality, trade and construction continued to lead monthly and annual increases. • Metro areas have minimal slack, which could hinder further gains in 2016 and 2017 - Many metro areas are posting unemployment below 4.0 percent. In particular, San Francisco, Austin, Nashville, Denver, Dallas, Silicon Valley and Boston all fall below the 3.5 percent mark, while more diversified geographies such as Atlanta, Chicago, Los Angeles, Miami, Philadelphia and Phoenix are in the 4.5 to 5.5 percent range. - As a result, we have seen and expect further gradual slowdowns in the rate of job growth in hot markets as employers run up against talent shortages. Accelerated job and office occupancy growth is likely in diversified markets before they too reach similar tightness. • Wage growth is up and benefits from continued low inflation - Annual wage growth rose by 10 basis points to 2.6 percent, led by information and a number of non-office industries. Wage growth has decoupled from job creation, with the rate of the former rising as the latter flatlines. - Although there is room for growth, wage growth remains meaningful as the Consumer Price Index continues to stall at 1.0 percent, providing for further purchasing power and consumer expenditures to drive quarterly GDP gains. Source: JLL Research, Bureau of Labor Statistics 2
  3. 3. June 2016 U.S. labor market at a glance +287,000 (69 consecutive months of growth) 1-month net change +2,451,000 (+1.7% y-o-y) 12-month change +777,000 10-year average annual growth Source: JLL Research, Bureau of Labor Statistics 4.9% Unemployment rate -40bp 12-month change in unemployment 62.7% Labor force participation rate 5,788,000 (+3.7% y-o-y) Job openings 5,092,000 (+0.4% y-o-y) Hires 2,912,000 (+8.6% y-o-y) Quits 3
  4. 4. After May’s sharp slowdown (and further downward revision), June bolted back with 287,000 net new jobs 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 84,000 251,000 273,000 228,000 277,000 150,000 149,000 295,000 280,000 262,000 168,000 233,000 186,000 144,000 11,000 287,000 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 1-monthnetchange 4 Source: JLL Research, Bureau of Labor Statistics
  5. 5. Unemployment rose slightly to 4.9 percent as the labor force expanded by 414,000 and participation rose 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% -1,000.0 -800.0 -600.0 -400.0 -200.0 0.0 200.0 400.0 600.0 Unemploymentrate(%) 1-monthnetchange(thousands) Monthly employment change Unemployment rate Source: JLL Research, Bureau of Labor Statistics 5
  6. 6. Even with slowing monthly job growth, openings continue to rise and stand at a record high of 5.8 million Source: JLL Research, Bureau of Labor Statistics 6 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Jobopenings(thousands)
  7. 7. 0 20 40 60 80 100 120 140 ConsumerconfidenceIndex Consumer confidence jumped up by nearly six points, but is still flat over the course of the 2016 Source: JLL Research, Conference Board 7
  8. 8. As wages continue to slowly rise on aggregate, they are doing so as inflation barely maintains 1.0 percent growth Source: JLL Research, Bureau of Labor Statistics – CPI data as of March 2016 8 -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 12-month%change Hourly wage growth CPI growth
  9. 9. 1.4% 1.9% 2.2% 2.4% 2.5% 2.8% 3.4% 3.7% 4.3% 4.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Other services Education and health Financial activities Professional and business services Trade, transportation and utilities Construction Manufacturing Mining and logging Leisure and hospitality Information 12-month % change in wages Apart from information, non-office sectors of the economy are leading wage growth Source: JLL Research, Bureau of Labor Statistics – office-using sectors in red 9
  10. 10. -9.4 -5.0 -0.1 0.0 2.9 3.0 3.6 11.0 13.0 14.0 15.2 16.0 22.0 29.9 38.0 44.0 58.4 59.0 59.0 -20 -10 0 10 20 30 40 50 60 70 Transportation and warehousing Mining and logging Motor vehicles and parts Construction Utilities Durable goods Wholesale trade Nondurable goods Other services Manufacturing Temporary help services Financial activities Government Retail trade Professional and business services Information Health care and social assistance Leisure and hospitality Education and health services 1-month net change (thousands) Most sectors have returned to growth mode after contractions in May; non-office continues to dominate 10 Source: JLL Research, Bureau of Labor Statistics
  11. 11. -128.0 -76.0 -29.0 8.0 17.4 17.5 36.0 38.4 47.0 54.7 71.0 129.0 163.0 217.0 312.8 413.0 497.0 587.9 668.0 -200 0 200 400 600 800 Mining and logging Durable goods Manufacturing Utilities Motor vehicles and parts Temporary help services Information Transportation and warehousing Nondurable goods Wholesale trade Other services Government Financial activities Construction Retail trade Leisure and hospitality Professional and business services Health care and social assistance Education and health services 12-month net change (thousands) 668.0 497.0 413.0 312.8 163.0 397.2 Education and health PBS Leisure and hospitality Retail trade Financial activities Manufacturing All other jobs Over the course of 2016, annual levels of growth have yet to budge and composition remains consistent Source: JLL Research, Bureau of Labor Statistics 11 Core subsectors added 83.8 percent of all jobs over the past 12 months.
  12. 12. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Unemploymentrateforbachelor’sdegreeholders(%) A slight bump in the participation rate increased white-collar unemployment to 2.5 percent, but still well below official rate Source: JLL Research, Bureau of Labor Statistics 12
  13. 13. Returning workers brought information employment back to normal levels, while finance and PBS are steadier -300 -250 -200 -150 -100 -50 0 50 100 150 200 2009 2010 2011 2012 2013 2014 2015 2016 Information Professional and business services Financial activities Source: JLL Research, Bureau of Labor Statistics 13
  14. 14. After contracting by upwards of 8.1 percent earlier this year, energy is finally stabilizing -11.0 -9.0 -7.0 -5.0 -3.0 -1.0 1.0 3.0 5.0 7.0 9.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 High-tech Energy, Mining, and Utilities Office-using industries Total non-farm Source: JLL Research, Moody’s. Note: Due to data lags, high-tech employment only available through January 2015. 14 12-month%change(jobs)
  15. 15. Unemployment claims ticked up slightly, but the moving average is stable at 269,000 per week Source: JLL Research, U.S. Department of Labor 15 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000 700,000 Claims Initial claims 4-week moving average
  16. 16. 0 1,000 2,000 3,000 4,000 5,000 6,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Hiresandquits(thousands) Hires Quits Hires and quits are still at near-cyclical highs, but have moderated Source: JLL Research, Bureau of Labor Statistics 16
  17. 17. Month after month, tech and Sun Belt markets continue to surpass the national rate of job growth by more than 100bp Source: JLL Research, Bureau of Labor Statistics 17 Dallas 4.6% Orlando 4.2%Austin 3.9% Silicon Valley 3.7% Phoenix 3.6% Seattle 3.6%
  18. 18. 0.2% 1.2% 1.3% 2.0% 2.1% 2.3% 2.4% 2.6% 3.0% 3.4% 3.6% 4.6% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Houston Boston Chicago New York Philadelphia Washington, DC Los Angeles South Florida Atlanta San Francisco Seattle Dallas 12-month % change As talent shortages make hiring more difficult, major market employment growth now mostly below 3.5 percent Source: JLL Research, Bureau of Labor Statistics 18
  19. 19. Contrary to the official rate, total unemployment dropped by 10bp to 9.6 percent; decreases have slowed and nearing low 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% Totalunemployemtn(%) Total unemployment U-6 10-year average Source: JLL Research, Bureau of Labor Statistics 19
  20. 20. The 414,000-person expansion of the labor force boosted the participation rate by 10bp to 62.7 percent Source: JLL Research, Bureau of Labor Statistics 20 60.0% 61.0% 62.0% 63.0% 64.0% 65.0% 66.0% 67.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Laborforceparticipationrate(%)
  21. 21. ©2016 Jones Lang LaSalle Research IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. For more information, please contact: Ben Breslau Managing Director - Americas Research Benjamin.Breslau@am.jll.com Phil Ryan Senior Research Analyst – Office and Economy Research Phil.Ryan@am.jll.com

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