Though February surprised on the upside when it comes to creating jobs—and sustained job creation is the lifeblood of real estate demand—the latest employment report wasn’t entirely strong. Some metrics released lately by the government are more problematic.
For instance, employment in many major industries, including manufacturing, transportation and warehousing, wholesale trade, financial activities, professional and business services, and government, showed little change over the month, according to the Bureau of Labor Statistics. Slow grow in financial activities, as well as professional and business services, impedes office demand; and slow growth in manufacturing and warehousing jobs points to weaker or at least static demand for industrial space.
The persistently strong dollar accounts for much of weakness in the industrial sector, as exporters sell less. Imports might make up for some of that as they pass through the country’s logistics system, but the sag in the economy has also put a damper the volume of imports lately. The Census Bureau reported last week that January exports were $176.5 billion, $3.8 billion less than December exports. January imports were $222.1 billion, $2.8 billion less than December imports.
Another challenging aspect of the latest jobs report was wage growth. That’s been the missing element of a full recovery for years now, and that sluggishness indirectly impacts demand for new retail space. In February, average hourly earnings for all employees declined by 3 cents to $25.35, following an increase of 12 cents in January. Average hourly earnings have risen by 2.2 percent over the year, ahead of inflation, but not by much.