October 2016 U.S. employment update and outlook

U.S. employment situation: September 2013

Release date: October 22, 2013

Muted growth in September,

but fundamentals are sound

U.S. employment situation: September 2016 October 7, 2016

September 2016 employment summary

• September was relatively average, but fundamentals are steady

- September saw 156,000 net new jobs created. While relatively average and not up to the consistent 200,000+ seen throughout much of

2014 and 2015, momentum nevertheless remains.

- Monthly additions were brought down due to contraction in government and slowdowns in very large sectors such as education and health

and retail trade. We expect that these are blips and will be revised or self-correcting in upcoming months. On the other hand, PBS

rebounded to healthier levels after a prolonged slowdown with some volatility in recent months.

• Job openings growing faster than employment as a result of talent shortages

- Unemployment rose by 10bp to 5.0 percent in September on the back of rising labor force participation, which also saw a bump to 62.9

percent. At the same time, initial unemployment claims continue to fall, with the moving average resting near a cyclical low of 250,000 per

week.

- In turn, job openings are rising due to broad-based economic growth but a smaller amount of slack in the labor market to absorb the need

for growing headcounts. Job openings have jumped by 3.9 percent over the year even as employment is only up 1.7 percent. For PBS, 5.9-

percent growth in job openings is signaling strong demand by employers, but employment rose by just 2.9 percent as labor force growth

cannot keep up.

• Consumer confidence rising on the back of meaningful wage growth

- Wage growth rose once again to 2.6 percent in September. While typical, the continued low-inflation environment has helped to keep the

cost of goods and to a lesser extent services down, even as inflation has reached the 1-percent mark.

- More meaningful growth in disposable income is powering personal consumption expenditures, which has kept GDP rising in the face of

stagnant business investment as well as bringing consumer confidence to a cyclical high of 104.1 points.

Source: JLL Research, Bureau of Labor Statistics

2

September 2016 U.S. labor market at a glance

+156,000(72 consecutive months

of growth)1-month net change

+2,447,000(+1.7% y-o-y)

12-month change

+782,00010-year average annual growth


5.0%Unemployment rate

-10bp12-month change in unemployment

62.9%Labor force participation rate

5,871,000(+3.9% y-o-y)

Job openings

5,227,000(+3.6% y-o-y)

Hires

2,980,000(+2.1% y-o-y)

Quits

3

September saw little change from August’s rate of growth, adding

156,000 new jobs; revisions had small impact

360,

000

226,

000

243,

000

96,0

0011

0,00

088

,000 10

6,00

012

2,00

022

1,00

018

3,00

016

4,00

0 196,

000

360,

000

226,

000

243,

000

96,0

0011

0,00

088

,000

160,

000

150,

000

161,

000

225,

000

203,

000

214,

000

197,

000

280,

000

141,

000

203,

000

199,

000

201,

000

149,

000

202,

000

164,

000

237,

000 27

4,00

084

,000

166,

000

188,

000 22

5,00

033

0,00

023

6,00

028

6,00

024

9,00

021

3,00

0 250,

000

221,

000

423,

000

329,

000

221,

000 26

5,00

084

,000

251,

000

273,

000

228,

000

277,

000

150,

000

149,

000

295,

000

280,

000

262,

000

168,

000

233,

000

186,

000

277,

000

24,0

0027

1,00

025

2,00

016

7,00

015

6,00

0

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2011

2012

2013

2014

2015

2016

1-m

onth

net

cha

nge

4


As the workforce grows faster than employment,

unemployment increased by 10bp to 5.0 percent

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

-1,000.0

-800.0

-600.0

-400.0

-200.0

0.0

200.0

400.0

600.0

Une

mpl

oym

ent r

ate

(%)

1-m

onth

net

cha

nge

(tho

usan

ds)

Monthly employment change Unemployment rate


5

In line with the workforce continuing to grow, job openings

reached a record high of 5.9 million


6

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Job

open

ings

(th

ousa

nds)

1.9%

2.8%

3.0%

3.1%

3.6%

3.6%

3.7%

4.5%

4.7%

5.9%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

Mining and logging

Information

Manufacturing

Construction

Other services

Trade, transportation and utilities

Financial activities

Education and health

Leisure and hospitality

Professional and business services

12-month % change in job openings

Across industries, job openings are rising significantly faster

than employment as companies fight for talent


7

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Hire

s an

d qu

its (

thou

sand

s)

Hires Quits

After slowing earlier in the year, both hires and quits rose,

indicating that the labor market remains healthy


Even as inflation rebounds slightly, wage growth continues to

outperform, providing increases in disposable income

Source: JLL Research, Bureau of Labor Statistics – CPI data as of March 2016

9

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

12-m

onth

% c

hang

e

Hourly wage growth CPI growth

1.8%

1.8%

1.8%

2.2%

2.5%

2.5%

3.0%

3.4%

4.2%

4.8%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

Mining and logging

Education and health

Other services


Trade, transportation and utilities


Manufacturing

Construction

Information


12-month % change in wages

Leisure and hospitality seeing fastest growth in wages, although

its current wage ($15.07) is the lowest among industries

Source: JLL Research, Bureau of Labor Statistics – office-using sectors in red

10

-13.0

-11.0

-11.0

-9.0

-3.1

-2.0

0.0

0.4

1.0

6.0

9.7

15.0

15.0

21.8

22.0

23.0

23.2

29.0

67.0

-20 -10 0 10 20 30 40 50 60 70 80

Manufacturing

Durable goods

Government

Transportation and warehousing

Motor vehicles and parts

Nondurable goods

Mining and logging

Utilities

Information


Wholesale trade

Other services


Health care and social assistance

Retail trade

Construction

Temporary help services

Education and health services


1-month net change (thousands)

Contraction in government and rate of growth in education and

health halved partially responsible for slower gains in September

11


-109.0

-92.0

-47.0

3.0

4.0

8.0

8.6

45.0

54.4

60.1

90.0

145.0

166.0

218.0

316.6

366.0

536.0

582.0

608.0

-200 0 200 400 600 800

Mining and logging

Durable goods

Manufacturing

Motor vehicles and parts

Utilities

Information

Transportation and warehousing

Nondurable goods

Temporary help services

Wholesale trade

Other services

Government


Construction

Retail trade


Health care and social assistance


Education and health services

12-month net change (thousands)

608.0

582.0

366.0

316.6

166.0

408.4

Education and health PBS

Leisure and hospitality Retail trade

Financial activities Manufacturing

All other jobs

Over the course of 2016, annual levels of growth have yet to

budge and composition remains consistent


12

Core subsectors added 83.3 percent

of all jobs over the past 12 months.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Une

mpl

oym

ent r

ate

for

bach

elor

’s d

egre

e ho

lder

s (%

)Even with an uptick in participation, bachelor’s degree

unemployment fell back to cyclical low of 2.5 percent


13

Although PBS had a strong showing in September, minimal

growth in finance and information pulled down gains

-300

-250

-200

-150

-100

-50

0

50

100

150

200

2009 2010 2011 2012 2013 2014 2015 2016

Information Professional and business services Financial activities


14

Tech steady at 4.5 percent as industry cools due to talent

shortage and lack of slack in the market

-11.0

-9.0

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

2008 2009 2010 2011 2012 2013 2014 2015 2016

High-tech Energy, Mining, and Utilities Office-using industries Total non-farm

Source: JLL Research, Moody’s. Note: Due to data lags, high-tech employment only available through August 2016

15

12-m

onth

% c

hang

e (jo

bs)

Once again, the initial claims moving average fell to near

250,000, indicating that the market is absorbing new entrants

Source: JLL Research, U.S. Department of Labor

16

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

700,000

Cla

ims

Initial claims 4-week moving average

0

20

40

60

80

100

120

140

Con

sum

er c

onfid

ence

Inde

xConsumer confidence reached a recovery high of 104.1 points

in September due to low inflation and sustained job creation

Source: JLL Research, Conference Board

17

Ongoing tech correction has resulted in Silicon Valley falling into

the mid-3%s for annual growth


18

Fort

Lauderdale

4.4%

Orlando

4.4%Dallas

4.2%

Seattle-

Bellevue

3.7%

Nashville

3.6%

Silicon

Valley

3.6%

Total unemployment has yet to budge from 9.7 percent; it will

likely remain there at its cyclical low

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Tot

al u

nem

ploy

men

t (%

)

Total unemployment U-6 10-year average


19

The labor force grew by 0.3 percent in September and is up

1.9 percent year-over-year, bringing up the participation rate


20

60.0%

61.0%

62.0%

63.0%

64.0%

65.0%

66.0%

67.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Labo

r fo

rce

part

icip

atio

n ra

te (

%)

©2016 Jones Lang LaSalle Research IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

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Ben Breslau

Managing Director - Americas Research

[email protected]

Ryan Severino

Chief Economist - Americas Research

[email protected]

Phil Ryan

Senior Research Analyst – Office and Economy Research

[email protected]

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Economy & Finance

October 2016 U.S. employment update and outlook