December 8, 2017
  • Headline: U.S. employment rose by 228,000 jobs in November, which was above the consensus expectation of 200,000. September’s data was revised upward and October’s downward for a net gain of 3,000 jobs. There likely was a small residual effect from hurricanes Harvey and Irma in this report, which shouldn’t impact future monthly totals. The unemployment rate was unchanged at 4.1% and the labor force participation rate remained at 62.7%.
  • Executive Summary: November’s report confirms the trend in recent months of strong hiring numbers, yet modest wage growth. Hiring was broad-based with strong gains in manufacturing, professional & business services and health care. Retail also had a solid increase of 19,000 jobs in November.
  • Wage Inflation: Wage growth fell short of expectations, rising 5 cents to $26.55 per hour in November. The 2.5% wage increase from a year ago is up from 2.4% in October, but down from 2.8% in September. The Atlanta Fed’s Wage Growth Tracker shows greater growth when accounting for the changing demographics in the labor pool. The Bureau of Labor Statistics’ Productivity and Costs Report released earlier this week showed a 3% year-over-year increase, which may lead to greater wage gains too. The increase in productivity is the latest hopeful sign for wage growth, which has been sluggish for the past several years as the labor market tightened.
  • Labor Force Participation: The labor force participation rate stayed at 62.7% in November. Without an improvement in the participation rate, it will be difficult to increase the pace of hiring. The rate has remained between 62.4% and 63.1% since August 2013.
  • Job Growth Outlook: We expect the rate of gains to moderate in coming months, as employers find it difficult to fill skilled positions from the current workforce. A rise in participation would help, but growth of the labor force will be limited due to the aging population. Employment growth has averaged 174,000 per month so far this year, down from 187,000 a year ago.
  • CRE Sector Employment:
    • Retail: Retail employment picked up in November with 19,000 jobs added. General merchandise stores, which includes department stores, added almost 7,000 last month. Food & beverage stores added almost 6,000 jobs. Electronics & appliance stores lost almost 5,000.  
    • Industrial: The transportation & warehousing sector added more than 10,000 jobs in November and 89,000 over the past year. 
    • Office: Professional & business services added 46,000 jobs last month after a 54,000 gain in October. The year-over-year gain rose to 598,000 and has run at a pace of more than 500,000 since September 2016. The financial activities sector added 8,000 jobs in November, and is up by 150,000 jobs year over year. Health care continues to be a bright spot, with nearly 30,000 jobs added last month, though the pace of hiring has slowed from 2016.
    • Construction: Construction added 24,000 jobs last month and is up 184,000 jobs over the past year. Specialty trade contractors added 23,000 jobs and residential building added another 4,000, as the rebuilding effort from the hurricanes will keep this sector moving for at least another year.