november 2016 u.s. employment update and outlook

U.S. employment situation: September 2013

Release date: October 22, 2013

Low unemployment pushing up

wages even as job creation slows

U.S. employment situation: October 2016 November 4, 2016

October 2016 employment summary

• Contractions and slowdowns in key subsectors pulled down October growth

- October saw 161,000 net new jobs, not meeting consensus expectations of 170,000-175,000 from many observers. However, revisions to

previous months were positive and brought year-to-date growth to 1.9 million jobs. This is still below the YTD 2015 figure of 2.2 million, but

volatility has been spurred by minimal slack and ability to recruit talent in many primary and secondary markets at the same rate as in 2014

and 2015.

- A small contraction in retail trade (-1,100 jobs) and a sharp slowdown in leisure and hospitality (+10,000 jobs), traditionally two of the

largest contributors to monthly growth, pulled down October gains. Other major subsectors such as PBS, health and construction, were

mostly stable over the month. Combined with flat expansion of the civilian labor force, unemployment dropped to 4.9 percent.

• Despite slower growth, wages rose at their fastest rate since 2009

- The highlight of October was wage growth, with 12-month gains totaling 2.8 percent, the highest figure since 2009. Across the board, with

the notable exception of education and health, wages rose by more than 2.0 percent, with most in excess of 3.0 percent.

- Sustained and accelerating wage growth will continue to play a critical role in keeping personal consumption expenditures elevated.

Consumer spending has been and will remain necessary for GDP growth in the absence of business investment.

• Fed rate hike likelier due to stability in job creation and rising inflation and wages

- Although the Federal Reserve once again did not raise interest rates in November, continued growth in the labor market and in particular

upward pressure on wages bodes well for a potential rate hike in December.

- More importantly, the consumer price index is beginning to make a more sustained rebound: after being near-zero for much of 2016, it is

now up 1.5 year-over-year. This is below the 2.0-percent target, but the core index (excluding food and energy) is up to 2.2 percent. With

wage growth outpacing inflation and rising steadily, fundamentals are likely strong enough for the Fed to act.

Source: JLL Research, Bureau of Labor Statistics

2

October 2016 U.S. labor market at a glance

+161,000(73 consecutive months

of growth)1-month net change

+2,357,000(+1.7% y-o-y)

12-month change

+783,00010-year average annual growth


4.9%Unemployment rate

-10bp12-month change in unemployment

62.8%Labor force participation rate

5,443,000(+2.5% y-o-y)

Job openings

5,210,000(+3.0% y-o-y)

Hires

2,981,000(+4.4% y-o-y)

Quits

3

October added a below-average 161,000 net new jobs, but

revisions to earlier data bring YTD figure up to 1.9 million

360,

000

226,

000

243,

000

96,0

0011

0,00

088

,000 10

6,00

012

2,00

022

1,00

018

3,00

016

4,00

0 196,

000

360,

000

226,

000

243,

000

96,0

0011

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

,000

166,

000

188,

000 22

5,00

033

0,00

023

6,00

028

6,00

024

9,00

021

3,00

0 250,

000

221,

000

423,

000

329,

000

221,

000 26

5,00

084

,000

251,

000

273,

000

228,

000

277,

000

150,

000

149,

000

295,

000

280,

000

262,

000

168,

000

233,

000

186,

000

277,

000

24,0

0027

1,00

025

2,00

017

6,00

019

1,00

016

1,00

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


A slowdown in the expansion of the civilian labor force and

steady job growth pushed unemployment down to 4.9 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 dropped to 5.4 million, but remain well above

previous peaks and indicate sustained demand for labor


6

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Job

open

ings

(th

ousa

nds)

1.7%

2.7%

2.7%

3.2%

3.4%

3.4%

3.8%

4.4%

4.6%

4.7%

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

Mining and logging

Manufacturing

Construction

Information

Trade, transportation and utilities

Other services

Financial activities

Education and health

Professional and business services

Leisure and hospitality

Job openings rate

Job openings rates across industries largely above the 3.0-

percent mark, outpacing job creation


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

Both hires and quits show more stability than job openings as

employee confidence and options grow


Continued labor market tightening has pushed wage growth to

2.8 percent, its highest figure since 2009

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

1.8%

2.4%

2.5%

2.5%

2.9%

3.2%

3.3%

3.7%

4.6%

5.2%

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

Education and health

Trade, transportation and utilities

Other services



Construction

Manufacturing

Mining and logging


Information

12-month % change in wages

Information sees wage growth surge past 5.0 percent, while

only education and health falls below the 2.0-percent mark

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

10

Growth in the labor force is approaching the rate of job

creation, but not fast enough to ease talent shortages


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

The pause in the civilian labor market resulted in a 10bp

decline in participation to 62.8 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 (

%)

-9.0

-5.0

-4.0

-2.0

-1.1

-0.1

0.9

4.0

6.0

6.3

6.4

7.5

10.0

11.0

14.0

19.0

39.1

43.0

52.0

-20 -10 0 10 20 30 40 50 60

Manufacturing

Durable goods

Nondurable goods

Mining and logging

Retail trade

Motor vehicles and parts

Utilities

Information

Other services

Wholesale trade

Temporary help services

Transportation and warehousing


Construction


Government

Health care and social assistance


Education and health services

1-month net change (thousands)

Contractions or slowdowns in a number of normally large

contributors (retail, leisure) pulled down October growth

13


-108.0

-88.0

-53.0

4.1

5.0

10.0

35.0

39.0

58.0

58.9

84.0

172.0

195.0

208.0

290.2

304.0

500.8

542.0

591.0

-200 0 200 400 600 800

Mining and logging

Durable goods

Manufacturing

Motor vehicles and parts

Utilities

Information

Nondurable goods

Temporary help services

Wholesale trade

Transportation and warehousing

Other services


Construction

Government

Retail trade


Health care and social assistance


Education and health services

12-month net change (thousands)

591.0

542.0

304.0

290.2

172.0

457.8

Education and health PBS

Leisure and hospitality Retail trade

Financial activities Manufacturing

All other jobs

Annual job growth and composition of gains have been highly

consistent in recent months


14

Core subsectors added 80.6 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 (%

)A 40bp increase in participation pushed up unemployment for

bachelor’s degree holders by 10bp to 2.6 percent


15

Office-using employment growth shows no end to volatility, but

overall figures are nearing YTD 2015 levels

-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

Tech steady at 4.5 percent as industry cools due to talent

shortage and lack of slack in the market

-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)

Despite a slight bump, the moving average for initial claims

remains near cyclical low and below the 260,000 mark

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

xIn line with slight slowdown in personal consumption

expenditures, consumer confidence remains near peak

Source: JLL Research, Conference Board

19

Florida remains the leader in local employment growth due to

cyclical volatility and diversified growth


20

Dallas

3.6%

Seattle

3.5%

Fort

Lauderdale

4.4%

Fort

Lauderdale

4.7%

Denver

3.3%

Silicon

Valley

3.6%

Total employment dropped once again to 9.5 percent, the

lowest level since 2008

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.

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november 2016 u.s. employment update and outlook

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