March Jobs Report: What The CRE Industry Needs To Know
U.S. job growth slowed in March as employers slowed their pace of hiring, adding only 98,000 new payrolls for the month.
This is a marked decline from the 235,000 new jobs added in February (though those gains have been revised down to 219,000) and the average of 189,000 per month added last year. Despite the low payroll additions, unemployment dropped to 4.5% in March, the lowest unemployment rate since May 2007 and down from February’s 4.7%, the Labor Department reported Friday.
“This morning's March employment report was a mixed bag, to say the least,” Stifel Fixed Income chief economist Lindsey Piegza said. “Looking past the headline rise in payrolls, the weakest monthly gain in 10 months, the jobless rate unexpectedly fell to the lowest level in nearly a decade. Of course, wage growth … slipped marginally.”
The decline in job gains was somewhat expected by economists partially because of the uncharacteristically warm weather, the Wall Street Journal reports. Despite March’s drop, the labor market remains one of the bright spots in the economy and continues to tighten as it approaches full employment.
Wage growth was still on the rise, up 0.2% in March, though it slowed to a pace of 2.7% year-to-year. Office-using jobs, typically driven by the professional and business services sector, outperformed the previous average in March, Newmark Grubb Knight Frank reported. The sector added 56,000 jobs for the month, exceeding its prior three-month average of 43,700.
“While weather and the changing retail sector played a big role, the labor market’s underperformance in March is consistent with the view that the pace of hiring is decelerating as wages rise and the pool of qualified workers shrink,” NGKF director of research in the Americas Robert Bach said.
The commercial real estate industry has been feeling the impact of the tightening labor market for some time. The construction industry’s labor force is dwindling, with construction starts, backlogs and pipelines all nearing cyclical highs owing to the lack of labor stalling efforts. Office-using companies are also pressed to find qualified talent, and many are making drastic moves to do so, such as relocating headquarters and opening new offices in emerging 18- to 24-hour cities where Millennials are moving en masse.
“Look for the economy to continue expanding at a moderate pace while absorption remains positive for most property types, although lower than the surge seen in 2014 and 2015,” Bach said.