Economy Watch: Employment Metrics Mostly Positive for CRE
- May 09, 2016
As expected, employment growth was weaker in April than in March for the U.S. economy, as reported by the Bureau of Labor Statistics on Friday, but there were also reasonably optimistic aspects to the report, such as the growth in wages.
There were also data that directly or indirectly benefits the commercial real estate industry, or reflect its health, such as employment in the financial service industry, which rose by 20,000 in April. Credit intermediation and related activities (up 8,000) contributed most to the gain. These kinds of jobs tend to take office space, sometimes Class A space in core markets. All together, the financial service industry added 160,000 jobs over the past 12 months.
Healthcare employment continues to grow as well. In April, healthcare employment rose by 44,000, with most of the increase occurring in hospitals (up 23,000) and ambulatory healthcare services (up 19,000). Hospitals don’t contribute to the health of real estate directly, except in the specialized niche that develops hospitals, but ambulatory care drives demand for medical office space, and increasingly neighborhood retail centers as well, where small clinics often locate. In any case, over the year healthcare employment has increased by 502,000.
Employment in the BLS category called “mining” continues to drop, because that includes oil and gas extraction. Mining employment was down 7,000 in April. Since reaching a peak in September 2014, employment in mining has decreased by 191,000 jobs, with more than three-quarters of the loss in support activities. That affects demand for office space in certain places, but among large markets, Houston especially, and Denver somewhat.
According to the BLS, employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, showed little or no change in April. Flat employment in manufacturing and warehousing reflects the fact that the demand for industrial is sluggish.