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November 2017 U.S. employment update and outlook

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October saw 261,000 net new jobs added, a rebound from a weak September hit with two hurricanes and an initially negative employment growth figure. Revisions brought September back to positive territory, however, extending the expansionary streak to 84 consecutive months of growth. Although unemployment has fallen to 4.1 percent, wage growth has yet to meaningfully improve, remaining below the 3.0-percent threshold and with most industries seeing a slowdown the rate of annual earnings growth.

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November 2017 U.S. employment update and outlook

  1. 1. National employment situation: October 2017 November 3, 2017
  2. 2. October 2017 U.S. labor market at a glance 2 +261,000 (84 consecutive months of growth) 1-month net change +2,004,000 (+1.6% y-o-y) 12-month change +830,000 10-year average annual growth 4.1% Unemployment rate 6,082,000 (+10.8% y-o-y) Job openings -70bp 12-month change in unemployment 62.7% Labor force participation rate 5,430,000 (+2.7% y-o-y) Hires 3,124,000 (+2.5% y-o-y) Quits Source: JLL Research, Bureau of Labor Statistics
  3. 3. Monthly growth rebounds after a weak, hurricane-affected September October saw 261,000 net new jobs added, a rebound from a weak September hit with two hurricanes and an initially negative employment growth figure. Revisions brought September back to positive territory, however, extending the expansionary streak to 84 consecutive months of growth. Gains in both monthly and annual terms were largely similar to previous months, with professional services, education and health and leisure and hospitality being strong performers. In some sectors, notably information, alternative and emerging subsectors such as other information services are growing quickly, but not enough to counter losses in more traditional areas. Despite tight conditions, wage growth continues to struggle Although unemployment has fallen to 4.1 percent, wage growth has yet to meaningfully improve, remaining below the 3.0-percent threshold and with most industries seeing a slowdown the rate of annual earnings growth. Continued tightening in the labor force and the lack of impending boosts to the number of new workers should result in a degree of increase, but it remains to be seen how much of an uplift in wage growth will occur, which will also challenge forecasting for consumer spending. Continued job growth and somewhat improving inflation likely to boost rate hike chance in December The Federal Reserve did not increase interest rates at its most recent meeting, but is expected to do so in December. Inflation is still volatile and job growth is less consistent than in previous months, but falling unemployment and strong sentiment from both businesses and consumers should provide enough confidence for further tightening. October 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 50,000 207,000 145,000 210,000 138,000 208,000 18,000 261,000 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 1-monthnetchangePost-hurricane revisions brought September data back into positive territory, with growth now for 84 months 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 261,000 net new jobs in October pushed unemployment to another cyclical low: 4.1 percent 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 stayed firm at 6.1 million, significantly outpacing the availability of new employees 6Source: JLL Research, Bureau of Labor Statistics
  7. 7. 3.1% 3.2% 3.5% 3.8% 3.8% 3.9% 4.1% 4.9% 4.9% 5.0% 0% 1% 2% 3% 4% 5% 6% Manufacturing Mining and logging Construction Trade, transportation and utilities Information Other services Financial activities Education and health Professional and business services Leisure and hospitality Job openings rate (%) Job openings rates across key industries remain in the 3.5%-5.0% range 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 tight labor market conditions, wage growth is still struggling to break 3.0 percent; inflation up 8Source: JLL Research, Bureau of Labor Statistics
  9. 9. 1.7% 1.9% 2.0% 2.2% 2.3% 2.7% 2.7% 3.3% 3.8% 4.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% Information Mining and logging Trade, transportation and utilities Manufacturing Construction Financial activities Professional and business services Other services Leisure and hospitality Education and health 12-month wage growth (%) Countering drop-offs elsewhere, education and health wage growth accelerated in October 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(%)A 40bp decline in the labor force participation rate was partially responsible for falling unemployment 10Source: JLL Research, Bureau of Labor Statistics
  11. 11. 57% 58% 59% 60% 61% 62% 63% 64% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Employment-to-populationratio(%)The employment-to-population ratio is still moving upwards, but likely not reaching previous high 11Source: JLL Research, Bureau of Labor Statistics
  12. 12. -8.3 -2.0 -1.0 0.0 3.4 5.0 5.0 5.7 8.4 9.0 11.0 12.0 18.3 19.0 24.0 33.5 41.0 50.0 106.0 -20 0 20 40 60 80 100 120 Retail trade Mining and logging Information Utilities Motor vehicles and parts Nondurable goods Financial activities Wholesale trade Transportation and warehousing Government Construction Other services Temporary help services Durable goods Manufacturing Health care and social assistance Education and health services Professional and business services Leisure and hospitality 1-month net change (thousands) After shedding 104,000 jobs in September, leisure grew by 106,000 in October, regaining all losses 12Source: JLL Research, Bureau of Labor Statistics
  13. 13. -20% 0% 20% 40% 60% 80% 100% 120% 2010 2011 2012 2013 2014 2015 2016 2017 Jobgrowthsince2010(%)Alternative, Internet-based information subsectors are countering declines in traditional media Source. JLL Research, Bureau of Labor Statistics 13 +99.1% Other information services Growth since 2010 (%) -0.8% Information (overall)
  14. 14. -3% -2% -1% 0% 1% 2% 3% 2010 2011 2012 2013 2014 2015 2016 2017 12-monthnetchangeAn 8,300-job contraction October has done little to help annual losses for retail trade Source: JLL Research, Bureau of Labor Statistics 14
  15. 15. -65.4 -64.0 -3.0 3.1 50.0 53.0 58.0 63.0 74.0 106.0 108.1 121.6 153.0 156.0 187.0 284.0 374.4 464.0 536.0 -100 0 100 200 300 400 500 600 Retail trade Information Utilities Motor vehicles and parts Nondurable goods Government Mining and logging Wholesale trade Other services Durable goods Transportation and warehousing Temporary help services Financial activities Manufacturing Construction Leisure and hospitality Health care and social assistance Education and health services Professional and business services 12-month net change (thousands) Composition of annual gains remains consistent, aided by PBS, health, education, leisure and construction 15Source: JLL Research, Bureau of Labor Statistics 536.0 464.0 284.0 153.0 156.0 411.0 PBS Education and health Leisure and hospitality Financial activities Manufacturing Retail trade All other jobs Core subsectors added 79.5 percent of all jobs over the past 12 months.
  16. 16. 0% 1% 2% 3% 4% 5% 6% 12-month%changeBachelor’s degree holders’ unemployment has fallen to 2.0 percent, further hindering corporate expansion 16Source: JLL Research, Bureau of Labor Statistics
  17. 17. -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 slowdown in financial activities hampered office- using growth in October; PBS stable 17Source: JLL Research, Bureau of Labor Statistics
  18. 18. -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 With job creation sharply slowing in the Bay Area, tech employment growth has dropped to 3.2 percent 18Source: JLL Research, Bureau of Labor Statistics
  19. 19. 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 have dropped back to cyclical lows after a hurricane-induced spike 19Source: JLL Research, U.S. Department of Labor
  20. 20. 0 20 40 60 80 100 120 140 ConsumerconfidenceindexA surge in consumer confidence has brought sentiment to its highest point since 2000 20Source: JLL Research, Conference Board
  21. 21. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 12-month%change Total unemployment 10-year average Total unemployment dropped to 7.9 percent, its first reading under 8.0 percent this cycle 21Source: JLL Research, Bureau of Labor Statistics
  22. 22. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 22 Phil Ryan Phil.Ryan@am.jll.com 212 292 8040

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