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NEW YORK, March 7, 2016 – Global economic uncertainty may still exist, but U.S. businesses continued to hire at a solid pace in February, reported Cushman & Wakefield Americas Research in its latest Employment Tracker report. The month saw businesses increase nonfarm payroll by a total of 242,000 new jobs, confirming that the economic fundamentals driving commercial real estate demand remain sound.
The stronger-than-expected jobs report also continues the string of improving economic data, “which is finally calming the nerves of the anxious equity markets,” said Rebecca Rockey, head of forecasting-Americas for Cushman & Wakefield Research. “For the first time this year, we have now observed three straight weeks in which the S&P closed higher than the week before, for example.”
The solid February numbers reversed a disappointing estimate of 172,000 new jobs in January, which reflected several months of softness in various goods-producing industries. Overall, the U.S. added 41,000 office-using jobs in February, and retail jobs were up by 54,900, according to the report. Government hiring was up as well, and, altogether, office-using, retail, construction, accommodation, food services, education, health and other services generated a total of 278,000 new jobs.
On the downside, that 278,000 number was minimally offset by job decreases in mining, down 18,000; manufacturing, down 16,000; and transportation and warehousing, which dropped by 5,300.
In terms of individual major markets, those with the lowest unemployment rates at the end of February were Minneapolis, 3.2 percent; Denver and San Francisco, both at 3.3 percent; and Austin, 3.4 percent. Those with the highest unemployment rates were Las Vegas, 6.5 percent; Detroit, 6.2 percent; Miami, 6.1 percent; Los Angeles, 5.9 percent; and Chicago, 5.8 percent.
“In terms of February wages, 10 of the 15 major industry groups recorded a year-over-year growth rate of 2 percent or greater in hourly earnings for 12 consecutive months,” said Rockey. “We expect wage growth to continue to increase, leading to healthy growth in income and consumer spending. That will ultimately feed business growth and the real estate sector.”
Other positive labor market indicators included a record level of job openings (5.6 million as of December) and a quit rate (the percentage of workers who quit their jobs) at its highest point this cycle, 2.1 percent, reflecting job mobility and the availability of more jobs for those seeking new positions. Also, the labor force participation rate increased for the fifth month in a row, and hiring was widespread across all sizes of firms.
“This bevy of metrics suggests that future labor demand, and therefore future demand for space, will remain healthy,” said Kevin Thorpe, Cushman & Wakefield chief economist and global head of research. “No single factor is more important for commercial real estate than job creation, and from that perspective, the fundamentals remain as solid as any time since the economic expansion began seven years ago.”
Download the full report here.
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