By Matt Valley
The U.S. economy appears to be gaining traction, boosting the outlook for the commercial property leasing market in the coming quarters, says Robert Bach, director of research for the Americas at real estate brokerage firm Newmark Grubb Knight Frank.
Emerging from their winter hibernation, employers added 288,000 net new payroll jobs in April, according to the Bureau of Labor Statistics (BLS), easily beating economists’ expectations of 220,000 jobs. The severe cold and heavy snow blamed for the meager U.S. GDP growth of 0.1 percent in the first quarter of 2014 is now a distant memory.
The BLS also revised the February and March data higher by a combined 36,000 jobs, putting the labor market within reach of a new peak that would erase all recessionary job losses, according to Bach. That new peak could occur as early as the next payroll employment report due to be released by the Bureau of Labor Statistics in early June.
The job gains in April were widespread. Among the highlights:
• The three primary office-using sectors — information, finance, and professional and business services — added a combined 78,000 jobs, beating the six-month average of 52,700. “If the labor market can sustain this level of performance during the next few months, the increased hiring will begin to show up in office absorption data,” says Bach.
• Sectors related to demand for industrial space — manufacturing, transportation and warehousing and wholesale trade — added 39,000 jobs, indicating strong occupier demand for warehouses and distribution centers in particular.
• Leisure and hospitality added 28,000 jobs in April, signaling continued strong performance in the lodging industry.
• Retailers added 34,500 jobs, building on March’s rebound from the weather-related losses earlier in the year.
• Construction added 32,000 jobs, including 4,100 in construction of nonresidential buildings and 4,000 in nonresidential specialty trade contractors, a leading indicator of new commercial properties coming on line.
• Education and health services added 40,000 jobs, including 18,700 in healthcare, with gains spread across all subsectors (including physician offices, hospitals and residential care facilities), a sign that providers are expanding to serve newly insured customers.
• Government added 15,000 jobs, mostly in local government education.
Average hourly earnings and average hours worked for all employees were unchanged in March, “a disappointing footnote to an otherwise upbeat report,” says Bach.
The unemployment rate, which is calculated from a different survey, dropped from 6.7 percent in March to 6.3 percent in April, the lowest level in five-and-a-half years. “Unfortunately, the drop is partly due to the exit of 806,000 workers from the labor force, which pushed the labor force participation rate down to 62.8 percent, tying a 36-year low,” explains Bach. “A robust labor market normally would attract new entrants, increasing the participation rate.”