April 2017 Jobs Report

Industry News

Market Reporting that Matters

April 2017 Jobs Report

Job Gains Bounce Back, Unemployment Dips Lower

Wednesday, May 10, 2017

The headline unemployment rate continued to drop in April, to 4.4%, and is now at its lowest level since May 2007, when it was also 4.4%.

Meanwhile, monthly job gains returned to above 200,000 for the third time this year and sixth time in the past 12 months. The initial estimate from the U.S. Bureau of Labor Statistics (BLS) indicated that total nonfarm payroll employment increased by 211,000 jobs. April’s job gains beat the consensus forecasts by about 20,000-30,000 jobs.  

 

IN THIS ISSUE

Top Metro Job Growth Still Softening

Retail Employment-Pocalypse

Is the Latest GDP Figure a Sign of Impending Recession?

February’s job-gain figure of 219,000 was revised up to 232,000, while March’s was revised down from 98,000 to just 79,000 -- a net decrease of 6,000 jobs during the previous two months. April’s monthly number was 25,000 jobs greater than the 12-month average, but 9,000 fewer than the average from May 2015-April 2016.

Annual job growth remained steady, ticking up to 1.6% from 1.5%, right at the 12-month average. Annual job gains were 2.237 million, 397,000 less than April 2016’s total but 58,000 more than March’s annual rate.

Average hourly earnings (wages) for privately-employed workers continued to rise, coming in at 2.5% on an annual basis in April, a slight decrease from March’s 2.6%, and slightly below the 12-month average of 2.7%. The average from May 2015-April 2016 was 2.4%.


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April’s U3, or “official,” unemployment rate of 4.4% was down from 5.0% in April 2016. The civilian labor force participation rate slipped to 62.9%, a 10-basis-points (bps) decline from April 2016. The employment-population ratio increased for the third straight month, by 10 bps to 60.2%.

The number of part-time workers for economic reasons decreased by 281,000 from March and was down by 698,000 from April 2016. The U6 unemployment rate, which includes these part-timers and marginally attached workers, decreased more than one full percentage point to 8.6% from last April.

In addition, the number of long-term unemployed (27 weeks or more) decreased by 61,000 from March, and was 433,000 lower than April 2016. The number of multiple jobholders increased by 226,000 from April 2016 to 7.6 million, but the number of discouraged workers not in the workforce (455,000) decreased by 113,000 from one year ago.

Industry Focus

The not seasonally adjusted unemployment rate for the oil and gas extraction industry fell to 4.7% in April from 9.5% in 2016. In fact, the unemployment rate for all major industry classifications – except Construction – fell from last year:


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The most significant job gains for April occurred in the Leisure & Hospitality (+55,000), Education & Health Services (+41,000), and Professional & Business Services (+39,000) sectors. Three other industries gained at least 15,000 jobs: Trade, Transportation & Utilities (+19,000), Financial Activities (+19,000), and Government (+17,000). Only Information (-7,000) lost jobs.


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  • The Leisure & Hospitality industry saw almost half its gains in the food services and drinking places subsector (+26,200), while the arts, entertainment and recreation subsector added another 21,400 jobs.
  • The jobs gained in the Education & Health Services supersector were almost evenly split between health care (+19,500) and social assistance (+17,300). Educational services added a paltry, but positive, 3,900 jobs in April.
  • Manufacturing’s April job gains (+6,000) were entirely in the nondurable goods sector (+9,000), with food manufacturing (+9,100) accounting for all of that sector’s gains. Durable goods manufacturing lost 3,000 jobs in April, with gains from motor vehicles and parts (+2,800), machinery (+2,200) and primary metals (+1,500); offset by losses in fabricated metal products (-3,500), semiconductors and electronic components (-2,300) and electrical equipment and appliances (-1,100). 
  • The Other Services industry (+7,000) had strong gains in the personal and laundry services (+7,700) subsector, but lost repair and maintenance jobs (-1,300).
  • Mining & Logging gained another 10,000 jobs in April, with support activities for mining adding 6,700 of those.
  • Government’s gains were attributed to the local government subsector (+23,000), as the federal subsector lost 6,000 jobs and state hiring was flat.
  • The Financial Activities supersector’s gains were largely the result of increases in the insurance carriers and related activities (+14,000) subsector.
  • The Trade, Transportation & Utilities supersector bounced back strongly from losses last month, with gains in each sector. Notable increases occurred in the durable goods trade (+6,800), other general merchandise stores (+8,000), and couriers and messengers (+3,200) subsectors.
  • The Professional & Business Services supersector’s gains were divided among the professional and technical services (+23,100) and administrative and waste services (+14,500) sectors. The largest subsector gain was in services to buildings and dwellings (+9,900).
  • Despite better weather in April, Construction (+5,000) hiring was lethargic nationally. The industry still added 4,300 jobs in the heavy and civil engineering construction subsector, and 1,300 in construction of buildings. But specialty trade contractors lost 1,500 jobs due to cutbacks in the nonresidential (-5,100) subsector.
  • Information’s losses were affected by drops in the telecommunications (-5,300) and broadcasting (-3,400) subsectors.

 

Top Metro Job Growth Still Softening

Nine of last month’s top 10 metropolitan areas for job gains returned to the list in the 12 months ending in March (the latest metro-area figures available), though several changed positions.

New York fell from the No. 1 spot for only the second time since December 2014, dropping to No. 3. Back then, Houston led the nation in job gains. In March, Atlanta vaulted to No. 1 and Dallas returned to No. 2. Los Angeles remained at the No. 4 spot and Phoenix moved up one position to No. 5. Riverside and Seattle improved two spots each to Nos. 6 and 7. Tampa returned to the top 10 at No. 8, as fellow Florida market Orlando slid to No. 9 from No. 5 in February. Boston remained at No. 10 in March, and Washington, DC tumbled out of the top 10, dropping from No. 6 to No. 11.

Together, the total jobs created in the 12 months ending in March for the top 10 metros were up 1.4% from February’s annual total (668,600 vs. 659,500), but down 13.2% from the 12-month total for March 2016 (668,600 vs. 770,300).

A few metros dropped sharply in the rankings: Chicago fell from No. 11 to No. 23, Las Vegas fell to No. 22 from No. 17 and Nassau County/Suffolk County fell from No. 16 to No. 38. However, a few metros moved up in the rankings from February: Oakland jumped from No. 31 to No. 15, Austin moved from No. 22 to No. 16 and Houston cracked the top 20, moving from No. 37 to No. 18.

Annual job growth slowed in all but two of the top 10 markets in March:

  • Orlando (-123 bps)
  • New York (-97 bps)
  • Phoenix (-77 bps)
  • Boston (-69 bps)
  • Los Angeles (-68 bps)
  • Tampa (-23 bps)
  • Riverside (-16 bps)
  • Seattle (-15 bps)

Job growth was up in:

  • Atlanta (+93 bps)
  • Dallas (+5 bps)

Milwaukee and Bridgeport remained in the bottom five from last month, as did Tulsa, as these metros continue to deal with their respective economic difficulties. Layoffs and cutbacks in Educational Services (-2,100) have hurt the New Haven-Milford economy, while Newark was hit hard by cutbacks in the state government (-3,100), food services and drinking places (-4,100) and temporary help services subsectors (-2,300).


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Access the latest metro jobs trends tables in Excel format here.

Please contact us if you have any questions.

Jay Denton                               KC Sanjay                                 Chuck Ehmann

Senior Vice President                Sr. Real Estate Economist         Real Estate Economist

jdenton@axiometrics.com         skc@axiometrics.com               cehmann@axiometrics.com

The Retail Employment-Pocalypse

Despite many bright spots in the latest employment survey from the BLS, one sector of the economy continues to deteriorate: retail employment. But not all retailers are feeling the same pinch, and the differential job gains (or losses) across retail categories paint a complicated picture of the strength of the single-family and multifamily housing markets.

The recent demise of several well-known retailers, including Payless and The Limited — to say nothing of struggling brands like Lululemon and Urban Outfitters — might seem odd in the face of strong retail sales in general.

But while retail sales are growing, much of this gain is driven by non-store retailers, including Amazon, at the expense of more traditional retailers based in shopping centers or malls. Whereas all retail sales increased by 5.5% in March (compared to March 2016), non-store retail sales increased by 11.9% compared to the year prior.



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With the change in consumer spending behaviors, bankruptcies and store closings are growing. Nearly 98 million square feet of retail space was vacated due to store closings in 2016, according to JLL — the highest level since 2008. Furthermore, nine retailers have announced bankruptcies thus far in 2017 — the same number as all of 2016.

 
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Changes in the retail job market reflect the diverging fortunes of retail sales.



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Retail jobs grew by only 0.5% on an annualized basis in April, compared to 1.3% in January and 1.6% in April 2016. But April’s job growth numbers look rosy compared to specific retail categories like electronics and appliance stores, department stores and general merchandise stores — each of which has been losing a significant number of jobs.

 
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However, there is one particular retail category currently seeing excellent job growth: furniture and home furnishing stores.

 
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While all retail establishments increased employment levels by only 0.5% in April (compared to April 2016), furniture and home furnishing stores have increased employment levels by 3.1%.

This tells us something interesting about the state of the economy and the housing market in particular. For one, it suggests a strong single-family housing market, which means people are spending more on home-related items. So, while retail sales and employment levels are growing at a relatively slow pace, this is not indicative of a broader slowdown in the economy — or a recession.

For the apartment market, a strengthening single-family market is good news, as it points to a stronger economy in general. But the incredible numbers of jobs lost in specific retail categories threaten to depress apartment demand — particularly class B and C apartments which cater to service-sector employees.

In short, the story of retail employment in 2017 is more complicated than it initially appears. Retail sales are still growing, but most of the growth is concentrated among non-traditional retailers, such as Amazon. As a result, traditional retailers are shedding jobs (or increasing them at a slower pace), just as non-traditional retailers are adding them at a robust pace. The differential job gains across retail categories (particularly for home furnishing retailers) points to a strong economy, which should boost the apartment market. But, at the same time, fewer jobs mean less demand for apartments.

For a case study of the impact of new technologies on employment, look no further than the retail market. The consequences for apartments should become evident in the not-so-distant future.

 

Is the Latest GDP Figure a Sign of Impending Recession?

The Bureau of Economic Analysis (BEA) released its advance estimate of real gross domestic product (GDP) growth for the U.S. in the first quarter of 2017. Surprisingly, it came in at just 0.7%, the lowest rate in three years.

That is extremely weak by any standard. But is this an indication of things to come? Are we heading for the recession that many economists and pundits have predicted is just around the corner?

The chart below shows GDP growth as calculated by the BEA from 2000 forward. We have discussed the BEA method of GDP growth calculation in previous newsletters (annualized quarterly change), but however it is measured, the economy hit a stall in the first quarter. The main culprit was weaker-than-normal consumer spending – which accounts for more than two-thirds of the economy. Business inventory investment was weak as well.

 
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But, as seen in the chart, one quarter of weak or negative GDP growth doesn’t send the economy into a tailspin. Several times in the current and previous economic expansion periods, GDP growth has fallen below 0.5% or turned negative. No immediate recession followed.

There are other indicators that one can scrutinize to determine the likelihood of an impending recession. In a recent article for Forbes, Axiometrics’ Senior Real Estate Economist KC Sanjay discussed these indicators and laid out three scenarios for potential recessions in the future – none of them before 2019.

 

By the Numbers

The following table shows March 2017 (the latest data available) metropolitan-area job gain and job growth, some grouped by state or region.



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