DTZ RESEARCH

U.S. EMPLOYMENT TRACKER

Labor Markets: Not Great, But Fine

Despite the weak economic figures posted earlier this year, the latest employment
numbers support our view that the U.S. economy is actually in fine shape. Payrolls
increased by 223,000 in April, which is a sharp acceleration from the weak 85,000 gain
in March and is more in line with the underlying trend. In addition, the unemployment
rate fell to 5.4%, and labor force participation inched up. Considering the formidable
headwinds the U.S. economy faced in April, including a soaring U.S. dollar, plunging
energy-related investment and global economic weakness, the latest employment figures
are about as strong as could be expected.

BLS Employment Report

April 2015

223,000

Change in Total Nonfarm

Employment

74,000
1,000

Office-using

The job sectors that drive demand for commercial real estate space remain in clear
expansion mode. In April, the professional and business services sector, which correlates
well with the office sector, added 74,000 net new jobs, which mirrors the average
monthly pace recorded in 2014. Also notable is the 1,700 law-firm sector jobs added in
April, considering that law firm hiring, on net, has generally been nonexistent for the last
two years. Indeed, April was the third consecutive month during which the legal sector
added to its payroll headcount. This could be a sign that law firms which are major
office occupiers in many CBDs have finally turned the corner.

Manufacturing

12,000

Retail

Vacancy Forecasts, By Sector

Based on Jobs

8.5%

16%

8.0%
15%
7.5%
14%

Office

Q2 16

Q1 16

Q4 15

Q3 15

Q2 15

Q1 15

Q4 14

Q3 14

Q2 14

Q1 14

Q4 13

Q3 13

7.0%

13%

6.5%

Industrial, right axis

Source: DTZ Research, Bureau of Labor Statistics

Wage Growth Accelerates

Yr/Yr % Change
3.0%
2.7%
2.4%

For industrial-related jobs, the data was more of a mixed-bag. Employment in energyrelated sectors continued to shrink. In April, payrolls in natural resources and mining
declined by 15,000. The energy sector has shed nearly 50,000 jobs since oil prices
began plunging last summer. The manufacturing sector saw a weak gain of 1,000 jobs.
On the upside, construction added a robust 45,000 new jobs, and the transportation and
warehousing sector added a healthy 15,200 jobs. On net, Aprils employment report was
a positive one for most U.S. industrial markets.
With the temporary drags mostly behind us, job growth is likely to accelerate going
forward. Job openings, which are often a leading indicator of future job creation, are
soaring to near-record levels. There are currently 5.1 million nonfarm job openings
of which 9 out of 10 are in the private sector. If an unemployed person filled each
open position, the unemployment rate would decline to 2.2%. It is under these tight
conditions that we typically expect to see a solid increase in real wages. Private sector
employee compensation, as measured by the Employment Cost Index, which includes
wages, salaries and fringe benefits, was up 2.8% year-over-year as of March 2015.
Some sectors business and professional services, office and sales and wholesale
trade are posting total employee year-over-year compensation growth well over 3%.
While this is only one measure of what workers earn, we anticipate real wages to finally
grow this year, especially as lower oil prices weigh on inflation.
Given the string of disappointing data reports that started the year, the possibility of the
Fed raising interest rates in June seems to have disappeared. In our view, September is still
the likely timeframe for the Fed to take its first step toward normalizing monetary policy.

2.1%

ECI (Yr/Yr, %)

Source: Bureau of Labor Statistics

Contacts
Kevin Thorpe
Chief Economist, Americas

Q1 15

Q4 14

Q3 14

Q2 14

Q1 14

Q4 13

Q3 13

Q2 13

Q1 13

Q4 12

Q3 12

Q2 12

Q1 12

1.8%
1.5%

May 2015

While unsettling, the first quarter weakness in the U.S. economy will likely prove to
be nothing more than a blip in an otherwise healthy trajectory. Indeed, in many ways
it reminds us of the softness we observed in the first quarter of 2014 which was
followed by GDP growth of 4.6% and 5% in the following two quarters. Although it was
just one report, the April employment numbers reinforce our view that the economic
backdrop as it pertains to commercial real estate remains solid.

Rebecca Rockey
Economist

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DTZ RESEARCH

U.S. EMPLOYMENT TRACKER

Employment Situation by Metro:
Total Nonfarm*
(000s)

Office-Using*

% Chg

(000s)

Industrial Sector*

% Chg

(000s)

% Chg

Unemployment
March 2015

Atlanta, GA

95.5

3.9%

25.8

3.7%

14.8

3.4%

6.0%

Austin, TX

25.4

2.8%

6.8

3.0%

2.4

2.0%

3.3%

Baltimore, MD

22.1

1.7%

5.7

1.8%

0.4

0.3%

5.8%

Boston, MA

25.0

1.5%

10.2

1.9%

-0.8

-0.5%

4.2%

Charlotte, NC

38.2

3.6%

9.3

3.4%

6.7

3.4%

5.2%

Chicago, IL

52.7

1.5%

16.2

1.7%

-1.9

-0.3%

6.3%

Cincinnati, OH

16.8

1.6%

8.1

3.3%

7.0

3.4%

4.7%

Columbus, OH

25.5

2.5%

2.3

0.8%

6.7

4.3%

4.2%

Dallas, TX

99.5

4.4%

36.9

5.4%

15.2

3.9%

3.9%

Dayton, OH

5.6

1.5%

2.5

3.4%

1.3

2.0%

5.1%

Denver, CO

51.6

3.9%

6.8

1.8%

6.3

3.5%

4.0%

Detroit, MI

48.8

2.6%

15.4

3.1%

17.1

4.5%

6.4%

Fort Lauderdale, FL

27.5

3.6%

7.7

3.7%

2.2

2.2%

5.4%

Houston, TX

94.6

3.3%

17.7

2.8%

12.6

2.3%

4.3%

Indianapolis, IN

29.2

3.0%

7.5

3.3%

8.7

4.5%

5.4%

Kansas City, MO

30.3

3.0%

10.8

4.0%

3.9

2.4%

5.2%

Las Vegas, NV

26.9

3.1%

2.9

1.7%

2.1

2.6%

7.2%

Los Angeles, CA

23.9

3.9%

8.1

6.1%

3.8

2.6%

4.6%

Louisville, KY

101.4

2.4%

9.5

0.9%

7.4

1.0%

7.6%

Miami, FL

37.6

3.5%

9.5

3.9%

4.6

2.7%

6.0%

Milwaukee, WI

8.8

1.0%

3.5

1.9%

0.8

0.4%

5.2%

Minneapolis, MN

39.4

2.1%

11.0

2.3%

9.9

2.8%

3.5%

Nashville, TN

23.8

2.7%

5.6

2.7%

6.3

4.0%

4.9%

New York, NY

136.9

2.1%

35.6

1.9%

1.2

0.2%

6.2%

Newark, NJ

16.0

1.4%

-0.5

-0.1%

3.2

1.6%

6.3%

Oakland, CA

26.4

2.5%

7.2

2.9%

3.7

2.3%

4.9%

Philadelphia, PA

45.4

1.6%

8.8

1.3%

4.8

1.2%

5.6%

Phoenix, AZ

56.7

3.1%

18.6

3.7%

1.9

0.7%

5.4%

Pittsburgh, PA

9.7

0.8%

-2.9

-1.1%

0.4

0.2%

5.3%

Portland, OR

33.2

3.1%

9.8

3.9%

6.6

3.2%

5.2%

Raleigh, NC

19.2

3.5%

9.1

6.1%

1.3

2.0%

4.5%

Sacramento, CA

26.9

3.0%

6.5

3.6%

0.7

0.8%

5.9%

San Diego, CA

40.6

3.0%

10.6

3.3%

2.4

1.5%

5.3%

San Francisco, CA

46.1

4.6%

27.9

7.7%

1.9

1.9%

3.7%

San Jose, CA

52.0

5.3%

28.3

9.6%

7.5

3.6%

4.2%

Seattle, WA

61.8

3.4%

17.2

3.9%

4.7

1.4%

5.0%

St. Louis, MO

14.4

1.1%

2.6

0.8%

7.1

3.3%

5.5%

Tampa, FL

30.2

2.5%

2.7

0.8%

2.3

1.6%

5.5%

Washington DC Metro

38.0

1.5%

8.3

1.1%

2.6

1.9%

4.8%

West Palm Beach, FL

21.5

3.9%

8.1

5.5%

1.6

3.3%

5.4%

*Employment change, Jan-March 2014 over Jan-March 2015

Source: Bureau of Labor Statistics

DTZ U.S. Research Kevin Thorpe, Chief Economist Tel: +1 202 463 2100

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DTZ RESEARCH

U.S. EMPLOYMENT TRACKER

Employment Indicators
Job Gains by Sector

By Company Size
U.S. Nonfarm Private Sector Job Growth, 000s

Small (1-490

120

April 2014 through April 2015, 000s

Medium (50-499)

Professional and business services

Large (500+)

Leisure and hospitality

100

Retail trade

80

Construction

60

Manufacturing

40

Transportation and utilities

20

Financial activities

Unemployment vs. Office Vacancy

Job Openings

100

200

300

400

500

600

Feb 2015

Source: Bureau of Labor Statistics

Feb 2015

Source: ADP National Employment Report

Oct 2013

Information

April 2015

Oct 2013

March 2015

Jun 2012

February 2015

Jun 2012

700

Total Nonfarm
18%

10%

5.5
5.0

9%

17%

8%
16%
7%

4.0
3.5
3.0
2.5

15%

6%

2.0

Unemployment Rate

Feb 2011

Job Openings (SA, millions)

Office Vacancy Rate

Source: Bureau of Labor Statistics, DTZ Research

Source: Bureau of Labor Statistics

Jobless Claims

Quit Rate

4-week Moving Average, 000s

Confidence Growing to Seek New Employment

700

2.4

600

2.2
2

500

1.8

400

1.6

300

Jobless Claims

Source: Employment and Training Administration

DTZ U.S. Research Kevin Thorpe, Chief Economist Tel: +1 202 463 2100

Feb 2011

Oct 2009

Jun 2008

Feb 2007

Oct 2005

Jun 2004

Feb 2003

1.2

Oct 2001

4/25/15

11/25/14

6/25/14

1/25/14

8/25/13

3/25/13

5/25/12

10/25/12

7/25/11

12/25/11

2/25/11

9/25/10

4/25/10

6/25/09

11/25/09

1/25/09

8/25/08

3/25/08

5/25/07

10/25/07

7/25/06

12/25/06

1.4
2/25/06

200

Oct 2009

Jun 2008

Feb 2007

Oct 2005

Jun 2004

1.0

Feb 2003

14%

Oct 2001

Q1 15

Q1 14

Q1 13

Q1 12

1.5

Q1 11

5%

4.5

Quit Rate, Total Nonfarm (SA, %)

Source: Bureau of Labor Statistics

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