Economy Watch: At 142K, September Job Creation Turns Out Tepid
- Oct 02, 2015
The U.S. economy created a net of 142,000 jobs in September, according to the Bureau of Labor Statistics on Friday. That’s a thoroughly mediocre report, and probably not going to help influence the Fed to raise interest rates later this year. Not only that, the change in total payroll employment for July was revised downward from a gain of 245,000 to 223,000, while the change for August was also revised downward from 173,000 to 136,000— an unusual circumstance, since monthly numbers are more often than not revised upward. With these revisions, employment gains in July and August combined were 59,000 less than previously reported. Over the past three months, job gains have averaged 167,000 per month. Not awful, but not very good either.
Some parts of the economy that drive office space absorption are still gaining jobs. For instance, employment in professional and business services continued to trend up in September, with a gain of 31,000, and that category has averaged 45,000 a month this year and 59,000 a month last year. Employment in financial activities and government services, which also impact office leasing, didn’t change much in September. Mining—which includes the energy industry—lost jobs again, dropping 10,000 for the month and 102,000 for 2015. That affects office space usage in certain markets, the largest of which is Houston.
Retail employment, which ultimately reflects the demand for retail space, trended up in September by 24,000, in line with its average monthly gain over the prior 12 months (up 27,000). In September, employment rose in general merchandise stores (the Walmarts of the world and their ilk) and automobile dealers (since car sales are still be pretty strong). Employment in food services and drinking places continued on an upward trend as well in September (up 21,000). Over the year, the restaurant industry has added 349,000 jobs, reflecting its expansion. Employment that impacts the industrial side of the real estate business didn’t budge much in September — namely manufacturing, wholesale trade, transportation and warehousing.
The headline unemployment rate didn’t change, coming in at 5.1 percent, though the more expansive U-6 metric dropped from 10.3 percent in August to 10 percent flat in September. Another bit of BLS data September that’s not good for the economy or for the demand for any kind of real estate: average hourly earnings for all employees on private payrolls, at $25.09, didn’t change much (down 1 cent), following a 9-cent gain in August. Without sustained growth in wages, demand for consumer goods and services probably won’t be any healthier than it already is, thus holding back the demand for retail and industrial space especially. Hourly earnings have risen by 2.2 percent over the year, a bit ahead of inflation, which means real gains have been meager.