december 2016 u.s. employment update and outlook

U.S. employment situation: September 2013

Release date: October 22, 2013

Unemployment falls to 4.6 percent, while

growth is adjusting to a new normal

U.S. employment situation: November 2016 December 2, 2016

November 2016 employment summary

• November job growth was moderate, but consistent with H2 2016 levels

- The U.S. labor market added 178,000 net new jobs in November, consistent with monthly additions during the second half of 2016 but

below the year-to-date and 2015 averages. With the notable exception of professional and business services (PBS), slower growth affected

most sectors during November, keeping the composition of gains similar in both monthly and annual terms.

- Unemployment dropped by 30 basis points to a cyclical low of 4.6 percent on the back of consistent job growth and a slight decline in the

labor force participation rate to 62.7 percent. Total unemployment mirrored this trend, also declining by 20 basis points to 9.3 percent. At

the same time, initial unemployment claims continue to slide and now average roughly 252,000 per week, in line with mid-2000s levels.

• The civilian labor force is not expanding fast enough to keep job creation as fast as in 2015

- Labor-market tightening has become very visible at the national level as well as across metropolitan areas. A combination of falling

unemployment and job creation exceeding the rate of labor-force expansion will likely lead to a new normal for monthly growth. Annual

growth in the labor force totaled 1.3 percent in November compared to 1.6 percent for total non-farm employment, further thinning the

remaining slack.

- Demand for goods and services remains on the rise, as evidenced by job openings remaining at roughly 5.5 million and maintaining a 3.7-

percent opening rate. This will keep upward pressure on wages steady and above inflation, although the consumer price index is beginning

to rebound as energy demonstrates initial signs of recovery.

• Consistent growth and inflation approaching 2.0-percent target make Fed hike very likely

- Although growth figures are not at previous levels, they remain healthy enough for the overall labor market to continue heading in the right

direction in terms of demand for workers and wage growth. With inflation now at 1.6 percent and nearing the Federal Reserve’s 2.0-percent

target and unemployment at its lowest point since August 2007, the stage has been set for a rate hike by the end of the year.

Source: JLL Research, Bureau of Labor Statistics

2

November 2016 U.S. labor market at a glance

+178,000(74 consecutive months

of growth)1-month net change

+2,253,000(+1.6% y-o-y)

12-month change

+785,00010-year average annual growth


4.6%Unemployment rate

-40bp12-month change in unemployment

62.7%Labor force participation rate

5,486,000(3.7% rate)

Job openings

5,081,000(3.5% rate)

Hires

3,070,000(2.1% rate)

Quits

3

November growth slightly below 2016 average, but gains remain

healthy in light of minimal labor-market slack

360,

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226,

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0,00

088

,000

160,

000

150,

000

161,

000

225,

000

203,

000

214,

000

197,

000

280,

000

141,

000

203,

000

199,

000

201,

000

149,

000

202,

000

164,

000

237,

000 27

4,00

084

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166,

000

188,

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423,

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329,

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273,

000

228,

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277,

000

150,

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149,

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295,

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280,

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168,

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142,

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8,00

0

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2011

2012

2013

2014

2015

2016

1-m

onth

net

cha

nge

4


Consistent growth and a drop in participation pushed

unemployment to a cyclical low of 4.6 percent

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

-1,000.0

-800.0

-600.0

-400.0

-200.0

0.0

200.0

400.0

600.0

Une

mpl

oym

ent r

ate

(%)

1-m

onth

net

cha

nge

(tho

usan

ds)

Monthly employment change Unemployment rate


5

Job openings show little change at 5.5 million, but continue to

rise faster than employment at 3.7 percent annually


6

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Job

open

ings

(th

ousa

nds)

2.5%

2.7%

3.2%

3.3%

3.5%

3.9%

4.1%

4.3%

4.5%

4.9%

1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5%

Mining and logging

Manufacturing

Construction

Information

Trade, transportation and utilities

Other services

Financial activities

Leisure and hospitality

Education and health

Professional and business services

Job openings rate

A healthy mix of office-using and non-office-using sectors is

seeing the fastest rate of job-opening growth


7

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Hire

s an

d qu

its (

thou

sand

s)

Hires Quits

Hires levels have become more volatile, but the hiring rate

remains stable at 3.5-3.6 percent


Hourly wage growth fell back to 2.5 percent in November, while

rising inflation is beginning to eat away at gains

Source: JLL Research, Bureau of Labor Statistics – CPI data as of March 2016

9

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

12-m

onth

% c

hang

e

Hourly wage growth CPI growth

0.0%

1.5%

1.9%

2.4%

2.4%

2.5%

2.6%

2.7%

4.1%

4.1%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%

Mining and logging

Education and health

Other services


Construction

Trade, transportation and utilities

Manufacturing



Information

12-month % change in wages

Information and leisure back to recent levels of wage growth

(4.1 percent); education and mining continue to lag

Source: JLL Research, Bureau of Labor Statistics – office-using sectors in red

10

A slowdown in labor-force growth will keep employment from

reaching the gains seen in 2015 and early 2016


11

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

12-m

onth

% c

hang

e

Civilian labor force Total non-farm

After showing signs of growth, the labor force participation

rate declined by 10bp to 62.7 percent


12

60%

61%

62%

63%

64%

65%

66%

67%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Labo

r fo

rce

part

icip

atio

n ra

te (

%)

-10.0

-8.3

-6.0

-4.0

-0.3

1.2

2.0

2.0

2.8

4.0

6.0

8.9

14.3

19.0

22.0

29.0

34.7

44.0

63.0

-20 -10 0 10 20 30 40 50 60 70

Information

Retail trade

Durable goods

Manufacturing

Utilities

Motor vehicles and parts

Nondurable goods

Mining and logging

Wholesale trade

Other services


Transportation and warehousing

Temporary help services

Construction

Government


Health care and social assistance

Education and health services


1-month net change (thousands)

Countering slow growth or even contractions in key industries,

PBS returned to very healthy rates of increase in November

13


-89.0

-77.0

-54.0

2.4

12.1

15.0

23.0

52.2

60.6

63.1

74.0

153.0

155.0

217.0

222.6

293.0

492.1

571.0

581.0

-200 0 200 400 600 800

Mining and logging

Durable goods

Manufacturing

Utilities

Motor vehicles and parts

Information

Nondurable goods

Wholesale trade

Transportation and warehousing

Temporary help services

Other services


Construction

Government

Retail trade


Health care and social assistance


Education and health services

12-month net change (thousands)

581.0

571.0293.0

222.6

153.0

432.4

Education and health PBS

Leisure and hospitality Retail trade

Financial activities Manufacturing

All other jobs

With the slowdown in growth affecting most industries, there

has been little change in annual composition of gains


14

Core subsectors added 80.8 percent

of all jobs over the past 12 months.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Une

mpl

oym

ent r

ate

for

bach

elor

’s d

egre

e ho

lder

s (%

)Like the official unemployment rate, bachelor’s degree

unemployment fell again to a new cyclical low of 2.3 percent


15

A rebound in PBS in recent months is making up for downward

revisions to financial activities and information figures

-300

-250

-200

-150

-100

-50

0

50

100

150

200

2009 2010 2011 2012 2013 2014 2015 2016

1-m

onth

net

cha

nge

(tho

usan

ds)

Information Professional and business services Financial activities


16

The tech slowdown continued in November, with year-over-year

growth now at 4.3 percent; still 2.7x faster than total non-farm

-11.0

-9.0

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

2008 2009 2010 2011 2012 2013 2014 2015 2016

High-tech Energy, Mining, and Utilities Office-using industries Total non-farm

Source: JLL Research, Moody’s. Note: Due to data lags, high-tech employment only available through September 2016

17

12-m

onth

% c

hang

e (jo

bs)

Initial unemployment claims remain on a slow but steady

downward trend and now average ~252,000 per week

Source: JLL Research, U.S. Department of Labor

18

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

700,000

Cla

ims

Initial claims 4-week moving average

0

20

40

60

80

100

120

140

Con

sum

er c

onfid

ence

Inde

xConsumer confidence rose considerably in November to 107.1

points, mirroring upward revisions to GDP and spending

Source: JLL Research, Conference Board

19

Florida remains the leader in local employment growth due to

cyclical volatility and diversified growth


20

Dallas

3.3%

Salt Lake

City

3.4%

Seattle-

Bellevue

3.7%

Orlando

4.0%

Denver

3.6%

As with the official unemployment rate, total unemployment

registered a 20-basis-point drop to 9.3 percent

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Tot

al u

nem

ploy

men

t (%

)

Total unemployment U-6 10-year average


21

©2016 Jones Lang LaSalle Research IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

For more information, please contact:

Ben Breslau

Managing Director - Americas Research

[email protected]

Ryan Severino

Chief Economist - Americas Research

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Phil Ryan

Senior Research Analyst – Office and Economy Research

[email protected]

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december 2016 u.s. employment update and outlook

Economy & Finance