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May 2017 U.S. employment update and outlook

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April’s 211,000 net new jobs were a return to the more robust growth rates seen over the past two years, although March figures were revised down once again to 79,000 jobs. Unemployment fell by 10 basis points to another cyclical low of 4.4 percent in April.

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May 2017 U.S. employment update and outlook

  1. 1. National employment situation: April 2017 May 5, 2017
  2. 2. April 2017 U.S. labor market at a glance 2 +211,000 (79 consecutive months of growth) 1-month net change +2,237,000 (+1.6% y-o-y) 12-month change +800,000 10-year average annual growth 4.4% Unemployment rate 5,743,000 (+3.2% y-o-y) Job openings -60bp 12-month change in unemployment 62.9% Labor force participation rate 5,314,000 (-2.4% y-o-y) Hires 3,084,000 (+3.4% y-o-y) Quits Source: JLL Research, Bureau of Labor Statistics
  3. 3. Lack of contribution from retail trade pulling down monthly gains April’s 211,000 net new jobs were a return to the more robust growth rates seen over the past two years, although March figures were revised down once again to 79,000 jobs. Year-to-date, employment growth stands at 738,000 jobs compared to 741,000 this time last year, indicating steady gains so far. Broken down by industry, leisure, education and health and professional services continue to be dominant, contributing to 63.9 percent of monthly additions. Previously a leader, retail trade continues to struggle: it has contracted by 14,500 jobs year-to-date, well below the 113,800 jobs that it created by April 2016. Unemployment drops once again as saturation intensifies Unemployment fell by 10 basis points to another cyclical low of 4.4 percent in April, aided by a combination of stronger job growth and fewer people entering and participating in the workforce: only 12,000 net new entrants were recorded during the month, while participation slid by 10 basis points to 62.9 percent. At annual rates, job creation is double that of labor force expansion, which is further squeezing talent and pushing up wages. The effects of this are beginning to be seen in the office market with slower occupancy growth due to talent shortages, most notably in tech-heavy geographies. Confidence is up even as inflation ramps up Even with a slight dip in April, consumer confidence remains above pre-recession heights at 120.9 points, with similar sentiment felt in much of the business community. However, rising inflation is beginning to have an effect on consumer spending, which was largely flat during the first quarter and suppressed GDP growth to just 0.3 percent. Wage growth remains high, particularly in skilled areas such as information and professional services, but increasing prices of goods and services will begin to temper further spending. April 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 24,000 271,000 252,000 176,000 208,000 135,000 164,000 155,000 216,000 232,000 79,000 211,000 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-monthnetchangeApril’s 211,000 new jobs were a return to normal, but March’s weak figures were further downgraded 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 A further 10bp dip in unemployment to 4.4 percent came on the back of a lack of increase in participation 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. 2.4% 2.4% 2.6% 2.9% 3.2% 4.2% 4.5% 4.7% 4.9% 5.2% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Construction Information Mining and logging Manufacturing Trade, transportation and utilities Financial activities Other services Professional and business services Leisure and hospitality Education and health Job openings rate (%) The job openings rate for education and health has risen past 5.0 percent; stable elsewhere 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 A 30bp drop in the consumer price index was matched by an equal drop in wage growth to 2.4 percent 8Source: JLL Research, Bureau of Labor Statistics
  9. 9. 4.3% 2.4% 2.3% 2.5% 2.6% 2.6% 3.0% 2.4% 3.5% 4.4% 1.4% 1.7% 1.9% 2.1% 2.2% 2.6% 2.7% 3.1% 4.3% 4.6% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Mining and logging Trade, transportation and utilities Education and health Construction Financial activities Other services Manufacturing Professional and business services Leisure and hospitality Information 12-month wage growth (%) April 2017 April 2016 Information, leisure and professional services saw most sustained increases in wage growth 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%changeAfter increasing earlier in 2017, the labor force participation rate declined by 10bp to 62.9 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 Jobs continue to be added twice as fast as people enter the labor force, resulting in tightening 11Source: JLL Research, Bureau of Labor Statistics
  12. 12. -7.0 -3.0 0.7 2.8 3.5 5.0 5.8 6.0 6.3 7.0 8.2 9.0 10.0 17.0 19.0 36.8 39.0 41.0 55.0 -20 -10 0 10 20 30 40 50 60 Information Durable goods Utilities Motor vehicles and parts Transportation and warehousing Construction Temporary help services Manufacturing Retail trade Other services Wholesale trade Nondurable goods Mining and logging Government Financial activities Health care and social assistance Professional and business services Education and health services Leisure and hospitality 1-month net change (thousands) Leisure, education, health and professional services continue to lead monthly additions by a large margin 12Source: JLL Research, Bureau of Labor Statistics
  13. 13. -46.0 -8.0 0.4 2.4 21.0 40.0 48.0 53.9 56.0 75.0 83.5 112.4 173.0 173.0 179.0 304.0 435.5 512.0 612.0 -100 0 100 200 300 400 500 600 700 Information Durable goods Utilities Motor vehicles and parts Mining and logging Manufacturing Nondurable goods Wholesale trade Other services Retail trade Transportation and warehousing Temporary help services Construction Financial activities Government Leisure and hospitality Health care and social assistance Education and health services Professional and business services 12-month net change (thousands) Hiring constraints are beginning to lower annual growth figures, but distribution of gains not changed 13Source: JLL Research, Bureau of Labor Statistics 612.0 512.0 304.0 173.0 75.0 521.0 PBS Education and health Leisure and hospitality Financial activities Retail trade Manufacturing All other jobs Core subsectors added 76.7 percent of all jobs over the past 12 months.
  14. 14. 0% 1% 2% 3% 4% 5% 6% 12-month%changeEven with an increase in participation, bachelor’s degree-holder unemployment fell to 2.4 percent 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 Financial activities saw a significantly bump in April (+19,000 jobs), but information is still in contraction 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 4.4-percent annual growth is the slowest so far this cycle as industry-specific constraints emerge 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’ moving average appears to have settled at a very low 242,000-243,000 per week 17Source: JLL Research, U.S. Department of Labor
  18. 18. 0 20 40 60 80 100 120 140 ConsumerconfidenceindexAlthough dropping slightly in April, consumer confidence remains above pre-recession highs 18Source: JLL Research, Conference Board
  19. 19. Atlanta and Nashville saw employment accelerate rapidly to 3.9 percent as in-migration increases 19 3.2% 3.3% 3.3% 3.4% 3.6% 3.7% 3.8% 3.9% 3.9% 2.5% 3.0% 3.5% 4.0% Seattle-Bellevue Salt Lake City Austin Fort Lauderdale Orlando Jacksonville Dallas Atlanta Nashville 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 declined markedly by 30bp in April to 8.6 percent; lowest rate since 2008 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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