By Danielle Everson
In the eyes of Bob Bach, director of research for the Americas with Newmark Grubb Knight Frank, the employment sectors most important to commercial real estate performed well during July based on the latest data from the Bureau of Labor Statistics (BLS). For example, in the office-using sectors of information, financial activities, and professional and business services, U.S. employers added 56,000 nonfarm payroll jobs during July, slightly less than the prior six-month average of 68,800.
The July employment report also spelled good news for the leasing market as a whole, adds Bach, “indicating that occupier demand for space will continue to grow at a moderate pace over the next few quarters.”
Despite the gains, the jobs report in July fell short of economists’ expectations. Nonfarm payroll employment grew by 209,000, including 198,000 jobs in the private sector. Analysts surveyed by Bloomberg prior to the release of the latest data by the BLS had expected the U.S. economy to create approximately 230,000 jobs in July. Bach says the latest figures are “easing fears in the financial markets — at least temporarily — that the economy was accelerating too rapidly.”
July marked the sixth consecutive month in which employers added 200,000 or more jobs, a string unmatched since the first seven months of 1997, but Bach says the gains as “muted” compared with the prior month. In June, nonfarm payroll employment grew by 298,000, according to revised figures provided by the BLS, 10,000 higher than originally believed.
Bach describes the job gains in July as widespread, led by professional and business services (+47,000 jobs), manufacturing (+28,000), retail trade (+26,700), construction (+22,000), and leisure and hospitality (+21,000)
The industrial-related sectors of manufacturing, wholesale trade, and transportation and warehousing gained a combined 38,600 jobs, on par with the six-month average of 37,300.
Retail trade was one of the few sectors to beat its six-month average. Retailers added 26,700 jobs in July, well above the six-month average of 16,300.
The 21,000 jobs gained in leisure and hospitality, which includes activity in hotels and restaurants, trailed the six-month average of 31,800.
The unemployment rate rose from 6.1 percent in June to 6.2 percent in July, while the average hourly earnings for all employees were flat in July and up just 2 percent over the past 12 months. The sluggish increase in earnings eased concerns over the recently released employment-cost index by the BLS showing wages rising at a faster clip, according to Bach.
Other details of the report suggests there is still some slack in the labor market, the veteran researcher believes, providing cover for the Federal Reserve to keep interest rates near zero until the middle of next year.