6 December 2019

Executive Summary

  • 266,000 jobs were created in November, far exceeding expectations of 187,000.
  • Elevated jobs growth was expected due to GM workers reentering the workforce after their strike, but strong gains were broad-based across industries.
  • Revisions to September and October employment reports showed an additional 41,000 jobs were created, raising the three-month average to 205,000 per month.
  • The unemployment rate fell slightly to 3.5%, while the labor force participation rate essentially was unchanged at 63.2%.
  • Average hourly earnings were up by 3.1% over the past 12 months, continuing healthy wage gains experienced throughout 2019.
  • November’s employment growth supports a pause in interest rate cuts by the Fed.
  • November marked 110 consecutive months of jobs growth—the longest stretch in U.S. history—and the unemployment rate matched a 50-year low.

Commercial Real Estate Highlights

  • Office: Hiring in office-using sectors powered ahead in November. Professional & business services added 38,000 jobs and financial services added 13,000, bringing their respective three-month averages to 36,000 and 11,700 per month.
  • Health Care: Growth in the health-care sector surged with 45,200 jobs created in November, exceeding the three-month average of 32,700 per month.
  • Industrial: Warehousing & storage jobs growth totaled 8,000 in November—significantly above the three-month average of 3,800 per month. The manufacturing sector gained 54,000 jobs, largely due to the end of a General Motors auto strike and bringing the three-month average to 4,300 jobs per month. Uncertainty from trade tensions will continue to weigh on the sector.
  • Retail: November’s employment report painted a strong picture for retail heading into the holiday season. Food services & drinking places added 25,300 jobs for the month. The broader retail sector added 2,000 jobs in November. Three-month averages show an average monthly gain of 35,400 food & beverage jobs and 12,000 retail jobs.
  • Construction: The construction sector added just 1,000 jobs in November, below the three-month average of 8,000 per month.
  • Multifamily: A strong labor market will underpin household formation and demand for multifamily properties. A structural shift in demand due to the high-cost of housing and student debt, among other factors, will also maintain a healthy multifamily market.
  • Hotels: Continued gains across industries—particularly in office-using jobs—bode well for business travel demand in the near term. Nevertheless, heightened uncertainty may begin to weigh on such travel as businesses become more vigilant about expenses. Demand from leisure travel will remain supported by a strong labor market.

The Bottom Line

November’s employment report far exceeded expectations. To have such a strong jobs report at a very mature point in the cycle is notable. Additionally, wage gains remained healthy, increasing by 3.1% over the past 12 months. This strength likely will give the Fed a reason to pause interest rate cuts. Beyond that, the broad-based strength of the report will support property market fundamentals.

CBRE expects economic growth will moderate in 2020, largely due to slower global growth and trade tensions. Sectors with exposure to these factors, such as manufacturing, will continue to face headwinds. Nevertheless, an outright downturn is unlikely due to the strength of consumers and continued economic growth supported by recent rate cuts. The outlook for property markets remains positive going into 2020.

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