Payroll Gains Positive for CRE

Analyzing the recent BLS report.

Today’s release from the BLS showed an increase of 164,000 jobs in July, with the unemployment rate standing at 3.7 percent. Some key sectors helpful to commercial real estate showed gains in professional and technical services (31,000), health care (30,000) and financial activities (18,000).

From an overall perspective, according to the BLS, the July increase in payroll employment was in line with the average monthly job gain in the first half of the year (+165,000), but below the average monthly job gain of 223,000 for 2018. (Incorporating revisions for May and June, which decreased employment by 41,000, monthly job gains have averaged 140,000 over the past three months.)

Recognizing that certain categories, from a sectoral perspective, help to increase levels of demand in the multifamily sector more than others, the BLS commented that the professional and technical services industries added 300,000 jobs over the past 12 months. Employment in computer systems design and related services rose by 11,000 over the month. Although it represents about one-fourth of the jobs in professional and technical services, computer systems design accounted for about one-third of the job growth in professional and technical services both over the month and over the year.

The BLS release showed employment in manufacturing changed little in July (+16,000). Thus far this year job growth in the industry has been markedly slower than in 2018. Employment growth in manufacturing has averaged 8,000 per month through July of this year, compared with 22,000 per month in 2018. The manufacturing workweek declined by 0.3 hour to 40.4 hours in July and is down by 0.6 hour since a recent peak in August 2018. Manufacturing hours are at their lowest point since November 2011. Factory overtime edged down by 0.2 hour to 3.2 hours in July.

Construction employment was essentially flat in July (+4,000). So far this year job growth in construction has slowed to an average of 15,000 per month, compared with 26,000 per month in 2018. Most notable perhaps is the response to increased costs in construction, making new projects less viable and the general slowdown in certain sectors of the economy.

Overall, the outlook remains slightly muted in some respects, but mostly positive overall. The full release from the Bureau of Labor Statistics Commissioner’s Statement on Employment is available at https://www.bls.gov/news.release/jec.nr0.htm.

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