Professionals in the commercial real estate field should closely monitor the monthly employment data released by the Bureau of Labor Statistics (BLS). These reports hold noteworthy trends that impact the US economy, subsequently influencing our commercial real estate markets.
I encourage you to review the schedule of the Table B-1 data from FRED as well.
Before diving into January’s data, let's highlight the upward revisions in employment figures for the last quarter of 2023. In addition to their previous reports, BLS noted another 60,000 jobs were added in October, 9,000 more in November, and 117,000 more in December.
Now, focusing on the January 2024 employment data, we observe that nonfarm employment, as per the establishment survey, grew by 353,000 jobs, bringing the total to 157,700,000. Over the past year, there has been an annual increase of 2,927,000 jobs.
It's worth noting, however, that this growth rate falls short of the 4.8 million jobs added in 2022. This suggests that while the job market is still expanding, the pace of growth has slowed down, which has significant implications for the US economy.
One interesting aspect arises when comparing the establishment survey data to the household survey data. In January 2024, the household survey reported a decrease of 31,000 jobs. We anticipate that the BLS will provide additional insights to reconcile this discrepancy.
Turning our attention to specific sectors, various industries exhibit noteworthy trends:
- Trade, transportation, and utilities: This sector witnessed a monthly increase of 64,000 jobs and an annual increase of 194,000 jobs, accounting for 18.4% of total employment.
- Retail trade: Within the retail sector, 45,200 jobs were added monthly, along with an annual increase of 140,500 jobs, constituting 9.9% of total employment. General merchandise stores, including major retailers like Walmart and Costco, contributed 23,700 of the monthly gain and 105,400 of the annual gain.
- Professional and business services: Employment in this sector expanded by 74,000 jobs monthly and 207,000 jobs annually, representing 14.6% of total jobs.
- Medical (Healthcare and social assistance): This sector experienced robust growth with 100,400 jobs added monthly and a substantial annual increase of 983,600 jobs, making up 14% of total employment.
- Food services and drinking places: Interestingly, this sector saw a monthly decrease of 2,400 jobs but recorded an annual increase of 236,800 jobs, comprising 7.8% of total employment.
- Government: The government sector added 36,000 jobs monthly and 601,000 jobs annually, constituting 14.6% of total jobs.
In summary, it is evident that the growth rates within national employment are tapering compared to the robust numbers seen in 2022. This deceleration in job growth bears significant relevance to the US economy. As employment growth moderates, it's crucial to monitor how this trend impacts the demand for office spaces, retail properties, and other assets within the commercial real estate market.
One of the standout sectors in the commercial real estate market that warrants special attention, especially given the current employment growth trends, is medical offices. Adding 983,600 jobs annually, this sector's expansion offers compelling reasons for real estate investors to consider medical office properties as a strategic investment.
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It's imperative to keep a close eye on these national employment trends, as they have the potential to shape the trajectory of the US economy and, subsequently, influence the dynamics of the commercial real estate market.
Thank you for your attention. Please contact me, Gary Ralston, if you have any questions.