july 2016 u.s. employment update and outlook

U.S. employment situation: September 2013Release date: October 22, 2013

The labor market bounced back in June, but slack is diminishingU.S. employment situation: June 2016 July 8, 2016

June 2016 employment summary

• Employment growth returns with strength after a very weak May- June saw 287,000 net new jobs added to the U.S. labor market, a return to healthy growth after a weak May that saw gains revised

downward to just 11,000 jobs. This is the highest monthly figure in eight months and will be reassuring to decision makers such as the Federal Reserve.

- A 414,000-person increase in the labor force brought participation to 62.7 percent and pushed up unemployment slightly to 4.9 percent. Still below the 5.0 percent threshold, unemployment is beginning to approach its cyclical low and is already “full” for white-collar workers.

- Job growth was broad-based, although non-office industries such as health, leisure and hospitality, trade and construction continued to lead monthly and annual increases.

• Metro areas have minimal slack, which could hinder further gains in 2016 and 2017- Many metro areas are posting unemployment below 4.0 percent. In particular, San Francisco, Austin, Nashville, Denver, Dallas, Silicon

Valley and Boston all fall below the 3.5 percent mark, while more diversified geographies such as Atlanta, Chicago, Los Angeles, Miami, Philadelphia and Phoenix are in the 4.5 to 5.5 percent range.

- As a result, we have seen and expect further gradual slowdowns in the rate of job growth in hot markets as employers run up against talent shortages. Accelerated job and office occupancy growth is likely in diversified markets before they too reach similar tightness.

• Wage growth is up and benefits from continued low inflation- Annual wage growth rose by 10 basis points to 2.6 percent, led by information and a number of non-office industries. Wage growth has

decoupled from job creation, with the rate of the former rising as the latter flatlines.- Although there is room for growth, wage growth remains meaningful as the Consumer Price Index continues to stall at 1.0 percent,

providing for further purchasing power and consumer expenditures to drive quarterly GDP gains.

Source: JLL Research, Bureau of Labor Statistics

2

June 2016 U.S. labor market at a glance

+287,000(69 consecutive months

of growth)1-month net change

+2,451,000(+1.7% y-o-y)

12-month change

+777,00010-year average annual growth


4.9%Unemployment rate

-40bp12-month change in unemployment

62.7%Labor force participation rate

5,788,000(+3.7% y-o-y)

Job openings

5,092,000(+0.4% y-o-y)

Hires

2,912,000(+8.6% y-o-y)

Quits

3

After May’s sharp slowdown (and further downward revision), June bolted back with 287,000 net new jobs

360,0

0022

6,000

243,0

0096

,000

110,0

0088

,000

106,0

0012

2,000

221,0

0018

3,000

164,0

00 196,0

0036

0,000

226,0

0024

3,000

96,00

011

0,000

88,00

016

0,000

150,0

0016

1,000

225,0

0020

3,000

214,0

0019

7,000

280,0

0014

1,000

203,0

0019

9,000

201,0

0014

9,000

202,0

0016

4,000

237,0

00 274,0

0084

,000

166,0

00 188,0

00 225,0

0033

0,000

236,0

0028

6,000

249,0

0021

3,000 25

0,000

221,0

0042

3,000

329,0

0022

1,000

265,0

0084

,000

251,0

00 273,0

0022

8,000

277,0

0015

0,000

149,0

0029

5,000

280,0

0026

2,000

168,0

0023

3,000

186,0

0014

4,000

11,00

028

7,000

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-mo

nth ne

t cha

nge

4


Unemployment rose slightly to 4.9 percent as the labor force expanded by 414,000 and participation rose

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

Unem

ploym

ent ra

te (%

)

1-mo

nth ne

t cha

nge (

thous

ands

)

Monthly employment change Unemployment rate


5

Even with slowing monthly job growth, openings continue to rise and stand at a record high of 5.8 million


6

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Job o

penin

gs (t

hous

ands

)

0

20

40

60

80

100

120

140

Cons

umer

confi

denc

e Ind

exConsumer confidence jumped up by nearly six points, but is still flat over the course of the 2016

Source: JLL Research, Conference Board

7

As wages continue to slowly rise on aggregate, they are doing so as inflation barely maintains 1.0 percent growth

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

8

-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

% ch

ange

Hourly wage growth CPI growth

1.4%

1.9%

2.2%

2.4%

2.5%

2.8%

3.4%

3.7%

4.3%

4.8%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

Other services

Education and health

Financial activities

Professional and business services

Trade, transportation and utilities

Construction

Manufacturing

Mining and logging

Leisure and hospitality

Information

12-month % change in wages

Apart from information, non-office sectors of the economy are leading wage growth

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

9

-9.4-5.0

-0.10.0

2.93.03.6

11.013.0

14.015.216.0

22.029.9

38.044.0

58.459.059.0

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

Transportation and warehousingMining and logging

Motor vehicles and partsConstruction

UtilitiesDurable goods

Wholesale tradeNondurable goods

Other servicesManufacturing

Temporary help servicesFinancial activities

GovernmentRetail trade

Professional and business servicesInformation

Health care and social assistanceLeisure and hospitality

Education and health services

1-month net change (thousands)

Most sectors have returned to growth mode after contractions in May; non-office continues to dominate

10


-128.0-76.0

-29.08.017.417.5

36.038.447.054.771.0

129.0163.0

217.0312.8

413.0497.0

587.9668.0

-200 0 200 400 600 800

Mining and loggingDurable goodsManufacturing

UtilitiesMotor vehicles and partsTemporary help services

InformationTransportation and warehousing

Nondurable goodsWholesale trade

Other servicesGovernment

Financial activitiesConstructionRetail trade

Leisure and hospitalityProfessional and business services

Health care and social assistanceEducation and health services

12-month net change (thousands)

668.0

497.0413.0

312.8

163.0

397.2

Education and health PBS

Leisure and hospitality Retail trade

Financial activities Manufacturing

All other jobs

Over the course of 2016, annual levels of growth have yet to budge and composition remains consistent


11

Core subsectors added 83.8 percent of all jobs over the past 12 months.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Unem

ploym

ent ra

te for

bach

elor’s

degr

ee ho

lders

(%)

A slight bump in the participation rate increased white-collar unemployment to 2.5 percent, but still well below official rate


12

Returning workers brought information employment back to normal levels, while finance and PBS are steadier

-300

-250

-200

-150

-100

-50

0

50

100

150

200

2009 2010 2011 2012 2013 2014 2015 2016

Information Professional and business services Financial activities


13

After contracting by upwards of 8.1 percent earlier this year, energy is finally stabilizing

-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 January 2015.

14

12-m

onth

% ch

ange

(jobs

)

Unemployment claims ticked up slightly, but the moving average is stable at 269,000 per week

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

15

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

700,000

Claim

s

Initial claims 4-week moving average

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 and

quits

(tho

usan

ds)

Hires Quits

Hires and quits are still at near-cyclical highs, but have moderated


16

Month after month, tech and Sun Belt markets continue to surpass the national rate of job growth by more than 100bp


17

Dallas4.6%

Orlando4.2%Austin

3.9%

Silicon Valley3.7%

Phoenix3.6%

Seattle3.6%

0.2%

1.2%

1.3%

2.0%

2.1%

2.3%

2.4%

2.6%

3.0%

3.4%

3.6%

4.6%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%

Houston

Boston

Chicago

New York

Philadelphia

Washington, DC

Los Angeles

South Florida

Atlanta

San Francisco

Seattle

Dallas

12-month % change

As talent shortages make hiring more difficult, major market employment growth now mostly below 3.5 percent


18

Contrary to the official rate, total unemployment dropped by 10bp to 9.6 percent; decreases have slowed and nearing low

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Total

unem

ploye

mtn (

%)

Total unemployment U-6 10-year average


19

The 414,000-person expansion of the labor force boosted the participation rate by 10bp to 62.7 percent


20

60.0%

61.0%

62.0%

63.0%

64.0%

65.0%

66.0%

67.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Labo

r for

ce pa

rticipa

tion r

ate (%

)

©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 BreslauManaging Director - Americas [email protected]

Phil RyanSenior Research Analyst – Office and Economy [email protected]

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july 2016 u.s. employment update and outlook

Economy & Finance