2 minute read time
September 3, 2021

Executive Summary

  • The U.S. added 235,000 jobs in August, missing expectations of 720,000. Professional and business services employment grew by 74,000, the most of any sector.
  • The unemployment rate fell by 20 basis points (bps) to 5.2% and the labor participation rate was unchanged 61.7%.
  • Average hourly earnings exceeded expectations, increasing by 0.6% in August, and by 4.3% from a year ago. This reflects ongoing inflationary pressures.
  • The already-robust job growth for June and July was revised upward, with 134,000 more jobs added. This pushed employment growth in July to over 1 million new jobs, highlighting how dramatically hiring slowed in August.
  • Investor reaction to the August jobs report has been muted with the 10-year Treasury yield rising slightly and equity markets mixed as of mid-day.
  • The recent surge in COVID-19 infections will continue to be a near-term headwind with slower job growth expected in September and October as well. However, CBRE does not expect the jobs slowdown to derail the broader recovery, though the U.S. economy is entering a period of lower growth.

Commercial Real Estate Highlights

  • Office: Office-using jobs increased by 90,000 in August. Professional & business services gained 74,000 and financial activities added 16,000. These gains support office demand. Still, CBRE expects the delta variant to weigh on return-to-the-office plans and could delay the sector’s recovery for several months.
  • Industrial: The warehousing & storage sector gained 20,200 jobs in August and manufacturing added 37,000. This further underpins a strong outlook for industrial and logistics properties, which are benefiting from continued economic growth and robust e-commerce demand.
  • Retail: Traditional retail lost 28,500 jobs in August, while food services & drinking places decreased by 41,500. Clearly, the delta variant is having a heavy impact. The outlook for the sector should improve as the delta wave recedes.
  • Construction: The construction sector lost 3,000 jobs in August amid supply chain disruptions. Demographics and historically low interest rates bode well for construction’s outlook over the next several years.
  • Health Care: Health care lost 4,900 jobs in August. Ambulatory health care (outpatient services) lost 1,200, while hospitals gained 3,200 and nursing & residential care lost 6,900. While COVID-19 has varied impacts on the sector, demographic trends and other long-term drivers of health-care-related real estate remain in effect.
  • Hotels: Accommodation services gained 6,600 jobs in August. CBRE expects an uneven recovery for the hotel industry, with domestic leisure travel destinations seeing near-term advantage and business travel destinations rebounding more gradually. The delta variant is a near-term risk, particularly for business travel, but there are sign of impact on leisure demand as well. We expect these headwinds to abate as the delta variant eventually wanes.
  • Multifamily: Continued strong economic growth supports household formation and ability to pay rent. The outlook for the urban multifamily market is improving as people move back to large cities and offices gradually reopen.

The Bottom Line

The U.S. added 235,000 jobs in August, well below expectations of 720,000. The COVID-19 delta variant is weighing on job growth; however, wide availability of vaccines and therapeutics should ensure continued recovery, albeit with some month-to-month volatility. With 5.3 million fewer people employed than before the onset of the pandemic, we expect the Fed to delay tapering asset purchases, despite the Fed Chairman’s public statements at last week’s Jackson Hole conference.

Overall, the August employment report reflects a continuing recovery as well as short-term impacts of the delta variant. CBRE expects delta to contribute to slower economic growth for the rest of 2021. Commercial real estate’s recovery remains intact, though delta may mean a slower rebound in the office, retail and hotel sectors.


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