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October 2017 U.S. employment update and outlook

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After more than 80 consecutive months of growth, the U.S. labor market saw its first contraction, losing 33,000 jobs in net terms, largely a result of Hurricanes Harvey and Irma. The overwhelming majority of losses were concentrated in the leisure and hospitality sector, particularly in Florida (Puerto Rico is not counted in monthly figures), further exacerbating this contraction.

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October 2017 U.S. employment update and outlook

  1. 1. National employment situation: September 2017 October 6, 2017
  2. 2. Setpember 2017 U.S. labor market at a glance 2 -33,000 1-month net change +1,777,000 (+1.2% y-o-y) 12-month change +823,000 10-year average annual growth 4.2% Unemployment rate 6,170,000 (+3.3% y-o-y) Job openings -70bp 12-month change in unemployment 63.1% Labor force participation rate 5,501,000 (+3.2% y-o-y) Hires 3,164,000 (4.4% y-o-y) Quits Source: JLL Research, Bureau of Labor Statistics
  3. 3. Hurricanes Harvey and Irma resulted in a contraction in employment in September After more than 80 consecutive months of growth, the U.S. labor market saw its first contraction, losing 33,000 jobs in net terms, largely a result of Hurricanes Harvey and Irma. The overwhelming majority of losses were concentrated in the leisure and hospitality sector, particularly in Florida (Puerto Rico is not counted in monthly figures), further exacerbating this contraction. Other industries were also affected to varying degrees, but largely remained in positive territory due to sustained growth in markets around the country. On an annual basis, employment growth slowed to slightly under 1.8 million jobs, far lower than the roughly 2.3 million seen in previous months. Despite monthly contraction, fundamentals remain solid Although September recorded contraction, underlying metrics remain solid. Headline unemployment dropped to a new cyclical low of 4.2 percent, while total unemployment has returned to pre-recession levels at 8.3 percent. Similarly, job openings broke a record high for a second consecutive month (now at 6.2 million), a 4.4-percent annual rise in quits indicates strong worker confidence in the job market and consumer confidence has been sustained. Wage growth also demonstrated positive momentum, reaching 2.9 percent even as inflation approached the 2.0-percent threshold. Fastest growing markets are cooling due to talent shortages Although talent shortages have been a common theme over the past year, particularly in tech, they have become noticeably more acute even in some of the fastest-growing metro areas in recent months. Primary, secondary and tertiary markets that repeatedly reached 4.0-percent growth in 2016 and early 2017 have now slowed to 2.8-3.5 percent and are largely dependent on further inbound migration of workers to maintain gains. September 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 50,000 207,000 145,000 210,000 138,000 169,000 -33,000 -100,000 0 100,000 200,000 300,000 400,000 500,000 1-monthnetchangeAfter 82 months of growth, the labor market contracted by 33,000 jobs as a result of hurricane-related effects 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 Despite job losses, unemployment fell to its lowest level so far this cycle: 4.2 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 hit a new record of 6.2 million, indicating continued demand for skilled employees 6Source: JLL Research, Bureau of Labor Statistics
  7. 7. 3.0% 3.2% 3.8% 4.0% 4.0% 4.0% 4.8% 5.1% 5.1% 5.4% 0% 1% 2% 3% 4% 5% 6% Manufacturing Construction Trade, transportation and utilities Information Mining and logging Financial activities Education and health Leisure and hospitality Professional and business services Other services Job openings rate (%) Job openings rates continue to rise, surpassing 5% for PBS and leisure, with most now above 4% 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 Wage growth rose by 40bp to 2.9 percent in September, countering increases in inflation 8Source: JLL Research, Bureau of Labor Statistics
  9. 9. 1.4% 1.5% 2.2% 2.2% 2.7% 3.0% 3.2% 3.3% 3.6% 5.2% 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 Financial activities Construction Other services Professional and business services Leisure and hospitality Information 12-month wage growth (%) Weak gains in goods-producing sectors is keeping wage growth muted 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 reached 63.1 percent in September, its highest figure in three years 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(%)Despite talent shortages, the employment-to-population ratio indicates a degree of underemployment 11Source: JLL Research, Bureau of Labor Statistics
  12. 12. -111.0 -9.0 -5.0 -5.0 -3.2 -2.9 -1.0 0.0 2.0 4.0 5.9 6.7 7.0 8.0 10.0 13.0 13.1 21.8 27.0 -120 -100 -80 -60 -40 -20 0 20 40 Leisure and hospitality Information Nondurable goods Other services Motor vehicles and parts Retail trade Manufacturing Utilities Mining and logging Durable goods Temporary help services Wholesale trade Government Construction Financial activities Professional and business services Health care and social assistance Transportation and warehousing Education and health services 1-month net change (thousands) September 111,000 leisure job losses, largely due to hurricanes hitting Florida and Texas 12Source: JLL Research, Bureau of Labor Statistics
  13. 13. -3% -2% -1% 0% 1% 2% 3% 2010 2011 2012 2013 2014 2015 2016 2017 12-monthnetchangeRetail trade’s woes continue, with losses now totaling 0.5 percent over the year Source: JLL Research, Bureau of Labor Statistics 13
  14. 14. -67.0 -31.2 -2.8 8.0 22.2 38.0 58.0 68.2 73.8 88.0 100.0 126.2 138.0 149.0 214.0 323.0 400.9 476.0 528.0 -100 0 100 200 300 400 500 600 Information Retail trade Utilities Government Motor vehicles and parts Nondurable goods Mining and logging Wholesale trade Transportation and warehousing Other services Durable goods Temporary help services Manufacturing Financial activities Construction Leisure and hospitality Health care and social assistance Education and health services Professional and business services 12-month net change (thousands) September significantly slowed growth in many sectors, leaving annual gains more concentrated 14Source: JLL Research, Bureau of Labor Statistics 582.0 476.0 323.0 149.0 138.0 109.0 PBS Education and health Leisure and hospitality Financial activities Manufacturing Retail trade All other jobs Core subsectors added 93.9 percent of all jobs over the past 12 months.
  15. 15. 0% 1% 2% 3% 4% 5% 6% 12-month%changeUnemployment for bachelor’s degree holders fell to 2.3 percent, which continues to challenge employers 15Source: JLL Research, Bureau of Labor Statistics
  16. 16. -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 Office-using growth dropped off in September as monthly PBS gains more than halved 16Source: JLL Research, Bureau of Labor Statistics
  17. 17. -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 has begun to flatline at 3.5 percent growth, although the broader economy is also slowing 17Source: JLL Research, Bureau of Labor Statistics
  18. 18. 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 claims jumped to between 260,000 and 280,000 in recent weeks as a result of hurricane-related job losses 18Source: JLL Research, U.S. Department of Labor
  19. 19. 0 20 40 60 80 100 120 140 ConsumerconfidenceindexConsumer confidence held steady in September, but is still very high by historical standards 19Source: JLL Research, Conference Board
  20. 20. Southeastern markets shown no sign of letting up on job growth in annual terms 20 2.6% 2.7% 2.8% 3.0% 3.1% 3.2% 3.3% 3.5% 2.5% 3.0% 3.5% 4.0% Charlotte Seattle Dallas Nashville Tampa Atlanta Orlando Raleigh-Durham 12-month % change Source: JLL Research, Bureau of Labor Statistics – data from August; does not take into account effects of Hurricanes Harvey and Irma
  21. 21. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 12-month%change Total unemployment 10-year average Dropping by 30bp to 8.3 percent, total unemployment is near pre-recession lows 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 202 719 6295

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