Employment Momentum, Accelerating Wages Support Real Estate Outlook

by Michal Ben-Moshe, Senior Marketing Director

Posted on March 1, 2017 at 14:00 PM


commercial real estate blog employment wages

Employment market consistently signaled steady economic growth

The employment market consistently signaled steady economic growth as unemployment is falling. Nationally, 2.2 million jobs were created during 2016, with unemployment dropping to its lowest level since 2007. Given that the current unemployment rate is 4.6 percent, according to U.S. Bureau of Labor Statistics, economy is approaching full employment. The U.S. has experienced 75 straight months of job growth — the longest streak since 1939.

Education and health services together with professional and business services combined for 52 percent of new jobs created during 2016. According to Bureau of Labor, in December alone, healthcare added 43,200 jobs. Both sectors benefit from emerging technology and demographic trends and tend to be the majority of the highest paying occupations

The big surprise, is that the average hourly earnings jumped as well. Average hourly earnings increased 10 cents or 0.4 percent in December after slipping 0.1 percent in November. That pushed the year-on-year increase in earnings to 2.9 percent, the largest gain since June 2009, from 2.5 percent in November. The wage growth may boost GDP growth above current expectations, while enabling households to increase consumption.

Although the 5.6 million current job openings sit near a record, hiring in the coming year could moderate as employers struggle to fill positions in a tight labor market, but the modest easing does not signal economic slowing. Apartment demand highlights this trend as 2016 absorption reached the third-highest yearly total on record at 328,000 units, with prospects for 2017 remaining optimistic.

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