June 2017 Jobs Report

Industry News

Market Reporting that Matters

June 2017 Jobs Report

Job Gains Better Than Expected

Tuesday, July 11, 2017

The U.S. economy added 222,000 jobs in June, according to the U.S. Bureau of Labor Statistics (BLS), much more than many economists predicted and the second-highest monthly gain this year. The unemployment rate ticked up slightly to 4.4% as more people re-entered the job market looking for work.

Revisions to the previous two months’ numbers added 47,000 jobs from the estimates. April’s job-gain figure of 174,000 was revised back up (after a downward revision last month) to 207,000, while May’s was revised up from 138,000 to 152,000. June’s monthly number was 35,000 jobs greater than the 12-month average and 20,000 more than the average from July 2015-June 2016.

 

IN THIS ISSUE

Big Apple Returns to Top of Metro Job Gains List

An Update on Current Trends

By the Numbers

Annual job growth remained at 1.6%, only 10 basis points (bps) less than June 2016. Annual job gains were 2.238 million, 186,000 less than June 2016’s total and 75,000 less than May’s annual rate.

Average hourly earnings (wages) for privately employed workers continued to rise, with June’s average of $26.25 representing a 2.5% increase from a year ago, though that was slightly below the 12-month average of 2.6%. The average from July 2015-June 2016 was 2.4%. Annual wage growth has stubbornly remained below 3.0% since April 2009.


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June’s U3, or “headline,” unemployment rate of 4.4% was up from 4.3% in May (although, rounding accounted for that – 4.36% vs. 4.29%, a 7-bps increase). The civilian labor force participation rate rose 10 bps to 62.8%, and was up the same amount from last year. The employment-population ratio of 60.1% also ticked up 10 bps from the previous month, but was 50 bps higher than June 2016

The number of part-time workers for economic reasons (5.33 million in June) increased by 107,000 from May, but was down by 494,000 from June 2016. The U6 unemployment rate, which includes these part-timers and marginally attached workers, decreased by 100 bps to 8.6% from last June.

In addition, the number of long-term unemployed (27 weeks or more), seasonally adjusted, was virtually unchanged from May at 1.66 million, but was 322,000 lower than last year. The average duration of unemployment fell by three weeks from June 2016 to 24.7 weeks. The number of multiple jobholders increased by 366,000 from June 2016 to 7.4 million, but the number of discouraged workers not in the workforce (514,000) increased by 12,000 from one year ago.

 

Industry Focus

The not seasonally adjusted unemployment rate for the oil and gas extraction industry fell a remarkable 890 bps to 2.6% in June, down from 11.5% in 2016. The unemployment rate for three industry classifications increased from last year (Wholesale & Retail Trade, Financial Activities, and Information). The remaining industries had lower rates than last year.


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The most significant job gains for June occurred in the Education & Health Services (+45,000), Leisure & Hospitality (+36,000), Professional & Business Services and Government (each +35,000) sectors. Other industries gaining at least 8,000 jobs were Trade, Transportation, & Utilities (+22,000), Financial Activities (+17,000), Construction (+16,000), Other Services (+11,000) and Mining & Logging (+8,000). Manufacturing was essentially flat (+1,000), and Information lost 4,000 jobs.

 


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  • Ambulatory health care services (+26,000), social assistance (+22,600) and hospitals (+11,700)contributed strong gains to the Education & Health Services supersector’s gains. Educational services (-14,100) were a drain on June’s total.

 

  • The food services and drinking places subsector (+29,300) provided the largest gain to the Leisure & Hospitality industry, and arts, entertainment and recreation added another 6,900 jobs.
  • The Professional & Business Services supersector’s gains were more in the higher-paying professional and technical services (+18,800) sector, but temporary help services (+13,400) hiring also was strong last month.
  • Government’s strong gain in June was all local government, split between education (+13,600), and non-education (+22,200). Federal (+4,000) and State (-4,000) figures offset each other.
  • The Trade, Transportation & Utilities supersector had strong gains in both wholesale (+10,000) and retail (+8,100) trade. Transportation and warehousing (+2,400) and even utilities (+1,800) also made positive contributions.
  • The Financial Activities supersector’s gains were led by real estate and rental and leasing (+9,500), and finance and insurance (+7,100).
  • In the Construction industry, nonresidential (+11,000) and residential (+7,500) specialty trade contractor subsectors both recorded strong gains in June, offsetting losses (-4,700) in construction of buildings.
  • The Other Services industry had gains split almost evenly between two of its three main subsectors: membership association and organizations (+5,600), and personal and laundry services (+5,200).
  • Support activities for mining added 6,900 jobs to the Mining & Logging supersector in June, as the national rig count continues to climb and the industry slowly recovers.
  • Manufacturing’s gain of 1,000 jobs was primarily an offset of gains in durable goods (+9,000) versus losses in nondurable goods (-8,000). Specifically, durable goods manufacturing had gains in six of 10 subsectors, while nondurable goods had losses in seven of its 10 subsectors.

  • As in May, the Information supersector’s losses were communications-related – motion picture and sound recording (-3,200), publishing (-2,200), broadcasting, except internet (-1,000), and telecommunications (-700). The two remaining subsectors added a total of 3,200 jobs. 

 

The Big Apple Returns to Top of Metro Job Gains List

Once again in May (the latest metro figures available), nine of the previous month’s top 10 job-gain metros remained the same, a pattern that has remained in place for more than one year. Several shifts among the top 10 did occur.

Atlanta, Dallas and New York remained the top three job-gainers among Axiometrics’ 120 ranked metros, as they were last month, But New York vaulted back into first place, moving Atlanta to No. 3. Los Angeles fell to No. 4, displacing Phoenix to No. 7, while Seattle dropped out of the top 10 to No. 11 after breaking into the top five in April. Orlando and Boston moved into the Nos. 5 and 6 spots, while Houston improved to No. 8 from No. 10 last month. Tampa returned to the top 10 at No. 9, as Riverside slipped to No. 10 from No. 7.

Together, the total jobs created in the top 10 metros for the 12 months ending in May were up 14.2% from April’s annual total (630,700 vs. 552,300), but down 8.2% from the 12-month total for May 2016 (630,700 vs. 686,800).

A few metros dropped sharply in the rankings: Anaheim dropped from No. 55 to No. 84, Baltimore fell from No. 43 to No. 58, Kansas City went from No. 24 to No. 32, and Oakland fell from No. 27 to No. 34. Several metros moved up in the rankings from April: Oklahoma City jumped from No. 90 to No. 62, Richmond moved from No. 74 to No. 47, St; Louis rose from No. 69 to No. 43, and Chicago moved from No. 44 to No. 24.

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

  • Los Angeles (-194 bps)
  • Riverside (-112 bps)
  • Phoenix (-79 bps)
  • Tampa (-44 bps)
  • Dallas (-22 bps)
  • Atlanta (-20 bps)
  • Orlando (-17 bps)

Job growth was up in:

  • New York (+16 bps)
  • Boston (+21 bps)
  • Houston (+137 bps)

The bottom five from last month returned in the same order, except for Milwaukee, which jumped from No. 119 to No. 97 and went from job losses to a gain of 2,400. The annual job losses in the remaining four metros lessened compared to April as these metros continue to deal with their respective economic difficulties. New Orleans returned to the bottom five, as losses in Government, Information and Financial Activities exacerbated weakness in the Leisure & Hospitality and Trade industries.


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Access the current job-growth spreadsheet 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

jay.denton@realpage.com         kc.sanjay@realpage.com            chuck.ehmann@realpage.com

 

An Update on Current Trends

National year-over-year job growth was 1.6% in June, a moderation of 70 basis points (bps) since the cycle’s peak in February 2015. While job gains nationally and in several major metros only eight of the top 50 job-gain markets recorded slower annual job growth than the national average.



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This slowing is evident in several top-tier and more active apartment markets — and not just in Houston and San Francisco. Charlotte and Chicago, for example, show significant moderation in both job and rent growth. Both metros have dropped an average of about 150 bps in annual job growth and about 300 bps in annual rent growth over the past two years.


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Dallas and Seattle, on the other hand, are two strong markets that continue to post enviable job gains month after month. Job growth has declined only about 60 bps, on average, in these two metros.



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But despite the strength of the Dallas job market, rent growth is moderating sharply, down about 350 bps from mid-2015. The same is true in Seattle, albeit with some recovery in rent growth since the beginning of this year (gaining back about 50 of the 300 bps decline since 2015). Keep in mind the supply side of the equation: both Dallas and Seattle are on track to add more new units this year than at any point since the late 1990s.

 

Energy Markets Rebounding

Oil rig counts are rising, and — considering that half of all U.S. oil rigs are located in the Permian Basin in West Texas — job growth in Southwestern energy markets is finally rebounding after a prolonged stretch of low oil prices.


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The number of jobs in Oklahoma City grew by an annual rate of 1.1% in May, the third month of positive annual job growth after a nine-month stretch of job losses. Midland and Odessa both experienced two years of job losses, but grew by 1.6% and 0.6%, respectively, in May. Consequently, these energy markets are beginning to see a turnaround in rent growth.

Houston is an interesting case because the reports of its deep downturn have largely been exaggerated. Job losses were reported only in three months (on a rolling annual basis in the summer of 2016. But even then, the extent of these losses were minimal. In fact, Houston has grown its job base in the past nine months at a faster rate than non-energy markets like Anaheim, San Diego and Washington D.C.


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The Houston market illustrates what usually happens when supply pulls back sharply and job growth returns. New apartment supply was expected to peak in the just-completed second quarter of 2017, while multifamily permits already peaked in the second quarter of 2015. The expected turnaround in Houston’s annual effective rent growth for Houston is still on the horizon, but with job growth returning and trending upward, apartment market conditions will eventually do the same.

 

By the Numbers

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



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