November 2016 Jobs Report

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Market Reporting that Matters

November 2016 Jobs Report

Unemployment Falls as Job Gains Continue

Thursday, December 8, 2016

Solid but unremarkable monthly job gains continued in November. The initial estimate from the U.S. Bureau of Labor Statistics (BLS) indicated that total nonfarm payroll employment increased by 178,000 jobs as the unemployment rate decreased to 4.6%. November’s job gains were slightly higher than consensus forecasts, but close to the 11-month average of 180,000 jobs.

September’s job-gain figure of 191,000 was revised up to 208,000, while October’s was revised down from 161,000 to 142,000 -- a net decrease of 2,000 jobs during the previous two months. November’s moderate monthly number was the lowest November figure since 2012.

Annual job growth dipped to 1.6% from October’s rate of 1.7% and was 40 basis points (bps) lower than the November 2015 rate. Annual job gains were 2.253 million, about 512,000 less than the previous 12-month period.

Average hourly earnings (wages) for privately-employed workers increased 2.5% on an annual basis in November, down slightly from last month’s 2.8%. 

Jobs figures November 2016
Job openings increased to 5.49 million from the previous month’s revised level of 5.45 million, according to the BLS’ Job Openings and Labor Turnover Survey, an increase of only 33,000. Professional & Business Services accounted for this 33,000 increase in openings as decreases in Trade, Transportation & Utilities (-18,000), Government (-12,000), and Leisure & Hospitality (-48,000) were offset by increases in the Manufacturing (8,000), Education & Health Services (22,000), Financial Activities (22,000), and Construction (29,000) sectors. Hiring was down by 187,000, and separations were down 138,000 from the previous month. 

The headline unemployment rate plunged to 4.6% in November, according to the Current Population Survey. A large portion of this is due to a decrease in the civilian labor force participation rate (down 10 bps to 62.7%) and an increase in the persons not in the labor force (up by 446,000). The employment-population ratio remained at 59.7%, but is 30 bps higher than November 2015. The number of unemployed (and looking for work) decreased by 387,000.

The number of part-time workers for economic reasons decreased by 220,000 from last month, and the U6 unemployment rate, which includes these part-timers and marginally attached workers, dropped to 9.3%, its lowest level since April 2008.

In addition, the number of long-term unemployed (27 weeks or more) decreased by 123,000 from October, and is 198,000 lower than November 2015. The number of multiple jobholders increased by 511,000 from November 2015 to 8.1 million (its highest level since 1998), but the number of discouraged workers not in the workforce (591,000) was virtually unchanged from one year ago.

Industry Focus

The not seasonally adjusted unemployment rate for the oil and gas extraction industry continued to decline from one year ago, dropping to 4.7% in November from 8.5% in November 2015. Financial Activities (+20 bps) was the only major industry category to increase while notable decreases were seen in the Other Services (-150 bps), Professional & Business Services (-70 bps), Construction (-50 bps) and Leisure & Hospitality (-30 bps) industries.

The Professional & Business Services (+63,000) and Education & Health Services (+44,000) supersectors added the most jobs in November. Only two industries lost jobs: Manufacturing (-4,000) and Information (‑10,000). The remaining industries gained a moderate number of jobs.

  • The Professional & Business Services supersector gained 23,700 higher-paying professional and technical services jobs, primarily from accounting and bookkeeping services (+17,700). Administrative and waste services added another 37,700 jobs, with temporary help services contributing 14,300 of those.
  • The Education & Health Services supersector featured strong gains in health care (+28,400), particularly in ambulatory health care services (+22,200) and hospitals (+5,500). The education sector added an additional 9,200 jobs, and social assistance contributed 6,300 jobs.
  • Leisure & Hospitality’s net gains of 29,000 came from 18,900 new jobs in the food services and drinking places subsector and 10,200 new jobs in arts, entertainment and recreation.
  • Government (+22,000) gained 14,000 local government jobs, 5,000 state jobs and 3,000 federal government jobs.
  • The continuing recovery in residential construction spurred the Construction industry (+19,000) to gain 14,700 jobs in residential specialty trade contractors.
  • Moderate positive contributions came from the Financial Activities (+6,000), Other Services (+4,000), Trade, Transportation, & Utilities (+3,000), and Mining & Logging (+2,000) supersectors.
  • The Information industry lost jobs in several subsectors, including motion picture and sound recording industries (-4,100), data processing, hosting and related services (-2,100) and telecommunications (-2,000).
  • The Manufacturing industry’s 4,000 job loss was primarily in the machinery (-3,900) subsector of durable goods.

Metro-Level Job Gains Continue to Slow

The top 11 metropolitan areas among the 120 in our Jobs Report adding the most jobs in the 12 months ending in October (the latest metro-area figures available) were the same as they were in September, though several changed positions.

New York and Dallas retained the top two spots, while Atlanta and Los Angeles once again traded the Nos. 3 and 4 spots. Washington, DC and Seattle traded the Nos. 5 and 6 spots, while Orlando slid to No. 8, replaced at No. 7 by Denver. Boston slipped one spot to No. 9 and Anaheim moved up one spot to No. 10 as Phoenix slipped to No. 11.

Together, the total jobs created in the 12 months ending in October for these 11 metros were down 7.5% from the annual total in September (689,500 vs. 745,500) and down 13.7% from the 12-month total for October 2015 (689,500 vs. 799,200).

A few metros dropped sharply in the rankings: Chicago fell from No. 12 to No. 27, Minneapolis from No. 13 to No. 20 and Fort Lauderdale from No. 15 to No. 19. Conversely, a few metros moved up in the rankings from last month: Portland jumped from No. 21 to No. 13, Oakland from No. 23 to No. 17 and Charlotte from No. 30 to No. 18. Houston remains positive, but improvement has slowed as well, moving to No. 40 in October from No. 35 in September.

Annual job growth slowed in six of the top 10 markets in October:

  • Dallas (-108 bps)
  • New York (-74 bps)
  • Anaheim (-70 bps)
  • Los Angeles (-61 bps)
  • Atlanta (-52 bps)
  • Orlando (-51 bps)

Job growth was up in:

  • Denver (+88 bps)
  • Seattle (+77 bps)
  • Boston (+31 bps)
  • Washington, DC (+2 bps)

Weakness in energy and manufacturing employment returned Odessa, TX and Oklahoma City to the bottom five list, while major local employer layoffs have rippled through the Greenville, NC and Lexington, KY economies. Those markets lost jobs in the Professional & Business Services, Education & Health and Leisure & Hospitality industries. Milwaukee, WI was also hit hard by layoffs at JP Morgan Chase, Northwestern Mutual, Caterpillar and Harley-Davidson.

Please contact us if you have any questions.

Jay Denton
Senior Vice President
 
KC Sanjay
Sr. Real Estate Economist
 
Chuck Ehmann
Real Estate Economist

Wage Growth (Finally) Outpaces Rent Growth

Average hourly earnings for private nonfarm employees (wages) grew by 2.5% in November from one year ago, after a 2.8% increase in October. That 2.8% annual increase generated a lot of attention in the media, but pales in comparison to the 3.9% wage increase for October reported by economists at the Federal Reserve Bank of Atlanta. Why the discrepancy?

The following chart graphs annual wage growth as calculated and reported by both the Bureau of Labor Statistics (BLS) and Atlanta Fed. Obvious differences are visible between the two data series, especially in somewhat stronger periods of economic growth (pre-Great Recession and post-2013). The difference is attributable to data sources and methodology.

The Atlanta Fed utilizes data from the BLS’ Current Population Survey (CPS), which interviews a sample of households each month and provides data on the labor force, employment, unemployment, persons not in the labor force, hours of work, earnings, and other demographic and labor force characteristics. This “household survey” provides the widely-reported monthly unemployment rate figure.

One key difference between the two surveys is that the household survey will pick up earners who are unconventionally employed or earn extra income from entrepreneurial activity (think Uber and Airbnb). This tends to explain a large part of the difference in wage growth in the 2007-2008 and post-2013 periods.

In addition, economists at the Atlanta Fed manipulate the survey data in a different way from the BLS. They use a “same-store” sample by matching individual respondents who responded in both the current month and 12 months earlier. This data set has a higher share of older, more educated workers in professional jobs than does the sample of all wage and salary earners. This sample of mainly continuously employed workers in higher-paying jobs can skew the results.

Another key metric in the chart is annual effective apartment rent growth for the U.S. moving monthly. Apartment rent growth rebounded in 2010-2011 after experiencing strong losses during the recession. The shattered single-family market was a large part of the reason for sharply increased apartment demand and resulting spike in rent growth. Growth normalized somewhat through 2013 before spiking again in 2015 and again normalizing. 

In October, annual apartment effective rent growth was 2.6%, 40 bps above its long-term average of 2.2%. In the same month, BLS wage growth was 2.8% and Atlanta Fed wage growth was 3.9% as earnings finally outpaced rent growth, giving those concerned about affordability a reason to breathe. 


Access the latest permit trends tables in Excel format here.The BLS wage growth calculations come from its monthly Current Employment Statistics Survey (CES), which tracks approximately 146,000 businesses and government agencies, providing detailed industry data on employment, hours and earnings of workers on nonfarm payrolls. This “employer survey” provides the monthly job gain figures reported in the media each month.

By the Numbers

The following table shows October 2016 (the latest data available) metropolitan-area job gain and job growth, some grouped by state or region.

 
 
 
 
 

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