Total U.S. nonfarm payroll employment rose by 126,000 in March, according to the Bureau of Labor Statistics (BLS), ending a string of 12 consecutive months of job gains above 200,000 and falling well short of the 245,000 jobs projected by Bloomberg’s survey of economists. The BLS also revised its figures downward by a combined 69,000 jobs in January and February.
Ryan Severino, senior economist and director of research at Reis, says that despite the tepid job growth figure for March — which is still subject to revision — the overall trend is positive for commercial real estate.
“The ongoing increases in hiring for business and professional services are a good sign. These tend to be higher-value jobs that create demand for commercial real estate over the long run,” says Severino. “Year to date, job creation per month is above last year, which was the best year for the labor market in terms of jobs created since 1999.” During the first quarter of 2015, nonfarm payroll employment has increased an average of 197,000 monthly, up from 193,000 during the same period a year ago.
In March, the largest job gains by sector were professional and business services (+40,000), followed by education and health services (+38,000). Conversely, the mining and logging sector shed 11,000, a sign of falling oil exploration, while the construction and manufacturing sectors each lost 1,000 jobs. Every major sector fell below its six-month average.
Office Sector Leads the Way
Bob Bach, director of research for the Americas with Newmark Grubb Knight Frank, says the office-using sector gained 50,000 jobs in March, industrial added 14,300 and retail increased by 25,900. The leisure and hospitality sector added 13,000 jobs, down sharply from its six-month average of 49,300.
The slowdown in the pace of hiring in March could be a one-month blip related to the weather, particularly noticeable in the construction, retail and restaurant sectors, says Bach. But he is quick to note that the broad deceleration across all sectors suggests other factors at play, including the decline in oil exploration and the negative impact of the strong dollar on manufacturers.
“Look for employment to rebound next month. The decline in oil prices will boost retail sales, excluding gasoline, as the year progresses, and the strong dollar will do the same by making imports cheaper, says Bach. “Sustained, moderate job growth combined with low interest rates will continue to support leasing and investment demand for commercial real estate.”
Wage growth rose 0.3 percent last month, an encouraging sign because slow wage growth has played a big role in the sluggish pace of the recovery, says Bach. But the 12-month increase is still low at 2.1 percent, in the tight range where it has resided since 2010. Weekly hours worked fell by 0.2 percent, which was likely weather-related, says Bach.
The unemployment rate was unchanged at 5.5 percent in March. The U-6 rate, which includes people marginally attached to the labor force and people working part time who want a full-time job, moved lower to 10.9 percent, its lowest level since August 2008.
The labor force participation rate slipped a notch to 62.7 percent, at the lower end of the tight range where it has resided for the past 12 months.
— Danielle Everson