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Market Reporting that Matters

November 2017 Jobs Report

U.S. Economy Continues to Grow

Tuesday, December 12, 2017


The U.S. economy added 228,000 jobs in November, according to the U.S. Bureau of Labor Statistics (BLS), another strong month of gains and the seventh month exceeding 200,000 jobs this year. The U3, or “headline,” unemployment rate remained at 4.1%, 50 basis points (bps) lower than November 2016 and the lowest national rate since December 2000.

Revisions to the previous two months’ numbers resulted in a net increase of 3,000 jobs to the estimates. September’s job-gain figure of 18,000 was revised upward to 38,000, while October’s was revised down from 261,000 to 244,000.



Post-Hurricane Harvey: Houston Rebounds

Apartments Continue to Be Good Investment

By the Numbers

Annual job growth was 1.4% in November, as it was in October, but was 20 bps less than November 2016. Annual job gains exceeded two million again at 2.071 million, although this was 235,000 less than November 2016’s total.

Average hourly earnings (wages) for privately employed workers were up by 5 cents from October, but November’s average of $26.55 represented a 2.5% increase from a year ago. Annual wage growth has averaged close to 2.6% since late 2016.

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The civilian labor force participation rate was unchanged from last month at 62.7%, but was 10 points higher than last year. The employment-population ratio of 60.1% fell 10 bps from the previous month, but was 40 bps higher than October 2016.

The number of part-time workers for economic reasons (4.8 million in November) decreased by 48,000 from October, and was down by 858,000 from November 2016. The U6 unemployment rate, which includes these part-timers and marginally attached workers, increased 10 bps to 8.0% in November, but is down 130 bps from November 2016.

The number of long-term unemployed (27 weeks or more) fell by 40,000 from October to 1.58 million on a seasonally adjusted basis. The number of multiple jobholders decreased by 514,000 from November 2016 to 7.6 million, and the number of discouraged workers not in the workforce (469,000) decreased by 122,000 from one year ago.

Industry Focus

The not seasonally adjusted unemployment rate for the Mining and oil & gas industry decreased the most in November from last year, dropping 230 bps, while Manufacturing fell 130 bps to 2.6%. Construction and Financial Activities each dropped 70 bps, while Education & Health Services and Other Services each fell 60 bps. The remaining industry sectors dropped from 10-50 bps, except for Information (up 100 bps) and Transportation & Utilities (up 50 bps).

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With last month’s post-hurricane rebound behind us, individual industry job gains returned to a more normal pattern, led by Education & Health Services (+54,000), Professional and Business Services (+46,000), Trade, Transportation & Utilities (+32,000), Manufacturing (+31,000) and Construction (+22,000). Information was the only industry to shed jobs last month.

Job gains by industry chart
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  • The bulk of job gains in the Education & Health Services industry came in the health care and social assistance sector (+40,500), particularly in the health care subsector (+29,500). The educational services sector added 13,100 jobs in November.
  • The Professional and Business Services supersector’s job gains were split almost evenly between the high-paying professional and technical services (+23,500) and the administrative and waste services (+23,100) subsectors, with the majority of the latter subsector’s gains in temporary help services (+18,300).
  • More than half of the jobs added in the Trade, Transportation and Utilities industry came in retail trade (+18,700), with solid gains in general merchandise stores (+6,800) and food and beverage stores (+5,600). Transportation and warehousing gained 10,500 jobs, with the bulk in the warehousing and storage subsector (+8,100). Wholesale trade had a positive, but moderate, contribution of 3,400 jobs.
  • Manufacturing hiring was very strong in durable goods manufacturing (+27,000), particularly in machinery (+8,300) and fabricated metal products (+7,400). Nondurable goods manufacturing added just 4,000 jobs last month.
  • Ongoing rebuilding efforts continued to boost both residential and nonresidential specialty trade contractors (+10,700 and +11,900, respectively), while the construction of buildings subsector added another 8,600 jobs in November.
  • Despite strong gains in the food services and drinking places subsector in November (+18,900), job losses in arts, entertainment and recreation (-7,000) caused a net gain of only 14,000 jobs in the Leisure and Hospitality industry.
  • The Other Services industry added 9,000 jobs, spread among its three subsectors: personal and laundry services (+3,500), repair and maintenance (+2,600), and membership associations and organizations (+2,500).
  • The Financial Activities industry’s 8,000 new jobs were all in the real estate and rental leasing subsector (+8,300).
  • Government industry employment added 7,000 jobs, with 9,000 of them at the local level. Another 1,000 jobs were added at the state level, but federal employment fell by 3,000 jobs.
  • The Mining & Logging industry rebounded with a 7,000 job gain, led by the support activities for mining subsector (+4,100).
  • The Information industry continued to lose jobs (-4,000), with the bulk of that in motion picture and sound recording (-3,600). 


Post-Hurricane Harvey: Houston Rebounds

Houston bounced back from Hurricane Harvey to add 48,100 jobs in the 12 months ending in October (the latest metro data available). The metro jumped to No. 5 among the 120 metros ranked by Axiometrics, a RealPage company, up from No. 24 last month. Nine of the top 10 metros from September returned, but several changed places. Several Florida metros also improved their rankings in October. Eight of the 15 most improved rankings from September were Florida metros.

New York remained No. 1, but Dallas displaced Atlanta for No. 2, dropping Atlanta to No. 3. Boston returned at No. 4 and last month’s No. 5 – Los Angeles – slipped to No. 8. Minneapolis-St. Paul ranked No. 6 again, and Riverside moved up one spot to No. 7. Seattle moved down two spots to No. 9, while Washington, DC remained No. 10 and Phoenix fell out of the top 10 to No. 12.

Together, the total jobs created in the top 10 metros for the 12 months ending in October were up 6.6% from September’s annual total (540,900 vs. 507,200), but were 7.2% lower than the 12-month total for October 2016 (540,900 vs. 582,700). A comparison of the same top 10 metro job-gainers from September to October revealed a 9.9% increase in annual job gains (led by gains in Houston and New York).

Other major metro movers included:

  • Miami jumped from No. 92 to No. 15.
  • Chicago moved up from No. 44 to No. 24.
  • Fort Lauderdale went from No. 36 to No. 18.

Several metros moved down the list:

  • Memphis fell from No. 57 to No. 94.
  • Cincinnati dropped from No, 15 to No. 35.
  • Denver dipped from No. 23 to No. 37.

California metros experienced mixed results: Anaheim, Sacramento and San Jose moved up in the rankings, while San Francisco, Oxnard and Oakland moved down the top 120 list.

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

  • Seattle (-124 bps)
  • Los Angeles (-112 bps)
  • Dallas (-107 bps)
  • Atlanta (-92 bps)
  • New York (-23 bps)
  • Washington, DC (-21 bps)

Job growth was up in:

  • Houston (+149 bps)
  • Minneapolis (+84 bps)
  • Boston (+79 bps)
  • Riverside (+31 bps)

Four of the bottom five returned from last month. Newark and Tucson experienced deeper losses from last month’s annual pace, while Akron and Virginia Beach’s annual job losses were similar. Knoxville joined the bottom five list in October. Tucson’s losses continued in administrative and support and waste management and remediation services (-2,600) with additional losses in retail trade (-1,300), while Newark’s losses were also in administrative and support services (-7,200), as well as food services (-3,600). Knoxville has seen increasing losses in the Professional & Business Services sector (-3,000).

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Access the current job-growth spreadsheet here.

Please contact us if you have any questions.


Apartments Continue to Be Good Investment

Apartments have historically been a good investment, compared not only to other real estate property types, but also to other investment vehicles. In the following chart, various indices and property types are charted using their average annual total returns since 1978 and their average volatility or risk as measured by the standard deviation. In addition, each variable’s Sharpe ratio is listed in descending order from best to worst.

The Sharpe ratio is a simple, but effective, measure of risk-adjusted return comparing an investment's excess return over the risk-free rate to its standard deviation of returns. The higher a fund's Sharpe ratio, the better a fund's returns have been relative to the risk it has taken on.


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The chart reveals that apartments have historically outperformed industrial properties and are well above office and hotels with higher average total returns and less risk. Apartments trail only retail for volatility or risk, as measured by the Sharpe Ratio. Compared to other investment options, apartment returns outperform bonds and T-Bills with somewhat higher risk, but are far below the average returns for the S&P 500 and NAREIT Equity REIT with their much higher risk volatility.

One of the advantages of apartment properties over other real estate types is the relatively short-term nature of apartment leases that allows owners and managers to adjust rents for changing market and economic conditions quickly. This flexibility and the larger number of leases (one for each unit) compared to other commercial real estate types provides some cushion for tenant churn and provides a more stable cash flow.

How have apartments fared since the Great Recession? The following chart is the same as the first chart, but with total returns for only the post-recession period. First, it is important to remember that each real estate type moves in its own cycle, and apartments were the first to recover from the Great Recession with robust returns in the early years of the recovery. Now, other property types are rising in their cycles, displacing apartments from the top spot. If this second chart were made in 2011, apartments would lead the other property types by a wide margin.


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Total returns for apartments underperformed most other property types since 2012 after the initial burst in appreciation returns apartments experienced right after the recession. Post-recession, apartments have slipped to third on the Sharpe ratio list behind industrial and retail, but still maintain a large lead over office and hotel properties.

Axiometrics forecasts short-term slowing in apartment appreciation or capital returns, with moderate growth in income returns, followed by normalizing total returns after 2018. Net operating income growth looks solid for the foreseeable future after 2017’s mild pause, and cap rates will begin to rise slowly as rent growth steadies and the already-low national vacancy rate hovers close to 5%. Apartments have historically been a good investment, with only moderate volatility or risk compared to other real estate types and even other investment options, and should continue to be a favored investment going forward.


By the Numbers

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

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