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June 2017 U.S. employment update and outlook

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May saw the addition of only 138,000 net new jobs, while gains in previous months saw downward revisions. Minimal improvement in retail trade combined with contractions in government and information kept increases down, although professional services, education, health and leisure remained stable.

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June 2017 U.S. employment update and outlook

  1. 1. National employment situation: May 2017 June 5, 2017
  2. 2. May 2017 U.S. labor market at a glance 2 +138,000 (80 consecutive months of growth) 1-month net change +2,266,000 (+1.6% y-o-y) 12-month change +804,000 10-year average annual growth 4.3% Unemployment rate 5,743,000 (-1.9% y-o-y) Job openings -40bp 12-month change in unemployment 62.7% Labor force participation rate 5,260,000 (-0.7% y-o-y) Hires 3,116,000 (+6.3% y-o-y) Quits Source: JLL Research, Bureau of Labor Statistics
  3. 3. Monthly gains continue to be unstable and below expectations Monthly job growth continues to be volatile and in many cases falling below expectations. May saw the addition of only 138,000 net new jobs, while gains in previous months saw downward revisions. Minimal improvement in retail trade combined with contractions in government and information kept increases down, although professional services, education, health and leisure remained stable. With little improvement in the diversity of growth by industry, labor shortages in key areas will be more acute in 2017 and 2018. Metro areas are beginning to slow Of the more than 50 large and mid-sized metro area tracked by JLL, only six now have annual job growth of more than 3.0 percent. Over the past year, the number of markets over this threshold has declined sharply as unemployment below 4.0 percent in many cases. Markets such as Portland, San Francisco and Seattle-Bellevue have recorded annual gains of 1.6, 2.2 and 2.7 percent, well below previous rates of growth. With tech growth declining to 3.9 percent, its lowest figure so far this cycle, exposed markets are likely to see further reductions in headcount growth and, in turn, demand for space. Consumer and business confidence metrics have stabilized Consumer and business confidence remain elevated, but growth has stalled and in some cases slowly declined. The Consumer Confidence Index dipped for the second consecutive month to 117.9 points, while the ISM Manufacturing Index has remained largely steady. Although the rapid increases of much of 2016 and earlier in 2017 have slowed off, confidence is strongly positive and will drive further growth in the short-term. May 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 84,000 251,000 273,000 228,000 277,000 150,000 149,000 295,000 280,000 262,000 126,000 237,000 225,000 153,000 43,000 297,000 291,000 176,000 249,000 124,000 164,000 155,000 216,000 232,000 50,000 174,000 138,000 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-monthnetchange138,000 new jobs in May fell short of expectations, while previous months saw downward revisions 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 continued is persistent downward movement to 4.3 percent as tightening intensifies 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 continue to hover around the 5.7-million mark as labor-market dynamics shift 6Source: JLL Research, Bureau of Labor Statistics
  7. 7. 1.7% 2.4% 2.8% 3.1% 3.3% 3.9% 4.4% 4.8% 5.1% 5.1% 0% 1% 2% 3% 4% 5% 6% Mining and logging Construction Information Manufacturing Trade, transportation and utilities Financial activities Leisure and hospitality Education and health Other services Professional and business services Job openings rate (%) Job openings for numerous sectors have a rate of more than 4.0 percent 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 Despite labor-market shortages, wage growth has yet to hit the 3.0-percent mark 8Source: JLL Research, Bureau of Labor Statistics
  9. 9. 4.4% 3.4% 2.1% 2.2% 2.7% 2.5% 1.9% 2.4% 3.6% 4.8% 1.4% 1.8% 1.9% 2.2% 2.2% 2.4% 2.5% 2.7% 4.2% 4.3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Mining and logging Manufacturing Education and health Trade, transportation and utilities Construction Professional and business services Financial activities Other services Leisure and hospitality Information 12-month wage growth (%) May 2017 May 2016 Only finance, leisure and other services saw an increase in annual wage growth in May 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 Laborforceparticipationrate(%)The labor force participation rate fell again to 62.7 percent in May 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 rates of job growth and labor force expansion have remained relatively stable in 2017 11Source: JLL Research, Bureau of Labor Statistics
  12. 12. -9.0 -6.1 -3.0 -2.1 -2.0 -1.5 -1.3 -1.0 2.0 3.6 6.0 11.0 11.0 12.0 12.9 31.0 32.3 38.0 47.0 -20 -10 0 10 20 30 40 50 Government Retail trade Nondurable goods Wholesale trade Information Motor vehicles and parts Utilities Manufacturing Durable goods Transportation and warehousing Mining and logging Construction Financial activities Other services Temporary help services Leisure and hospitality Health care and social assistance Professional and business services Education and health services 1-month net change (thousands) Retail once again saw contraction, losing 6,100 jobs over the month 12Source: JLL Research, Bureau of Labor Statistics
  13. 13. -16.0 -0.3 5.3 24.0 32.0 35.9 39.0 49.5 63.0 74.3 77.0 117.0 140.5 165.0 191.0 331.0 436.7 525.0 622.0 -100 0 100 200 300 400 500 600 700 Information Utilities Motor vehicles and parts Durable goods Mining and logging Retail trade Nondurable goods Wholesale trade Manufacturing Transportation and warehousing Other services Government Temporary help services Financial activities Construction Leisure and hospitality Health care and social assistance Education and health services Professional and business services 12-month net change (thousands) PBS still tops annual growth, while information remains in flat or contracting mode depending on the month 13Source: JLL Research, Bureau of Labor Statistics 622.0 525.0 331.0 165.0 63.0 524.1 PBS Education and health Leisure and hospitality Financial activities Manufacturing Retail trade All other jobs Core subsectors added 76.9 percent of all jobs over the past 12 months.
  14. 14. 0% 1% 2% 3% 4% 5% 6% 12-month%changeBachelor’s degree-holder unemployment fell to its cyclical low of 2.3 percent in May 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 Information has yet to expand during any month of 2017 so far, keeping office-using growth muted 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 For the first time this cycle, tech job growth fell below the 4.0-percent annual rate 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 at record lows: ranging from 233,000 to 238,000 in recent weeks 17Source: JLL Research, U.S. Department of Labor
  18. 18. 0 20 40 60 80 100 120 140 ConsumerconfidenceindexConsumer confidence’s slight dip not enough to keep it from near cyclical high reached earlier in 2017 18Source: JLL Research, Conference Board
  19. 19. The number of large and mid-sized metro areas seeing 3%+ job growth has declined as shortages increase 19 3.0% 3.2% 3.3% 3.3% 3.5% 3.6% 2.5% 3.0% 3.5% 4.0% Dallas Fort Lauderdale Salt Lake City Atlanta 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 At 8.4 percent, total unemployment is only 50bp away from its pre-recession low of 7.9 percent 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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