U.S. labor market update for July 2022
- Posted by admin
Continued strong job growth.
U.S. employers hired 372,000 people in June, bringing total employment just 0.4% below the high point recorded in February 2020. June marked the fourth consecutive month of job gains with the unemployment rate at just 3.6% and job creation well above the monthly 300,000 mark. This solid and encouraging growth is taking place in sectors that have already surpassed their pre-pandemic levels in addition to contributing to the rebound of other, still recovering sectors.
The industrial and office sectors have strong real estate disparities. Among the fastest-growing sectors relative to pre-pandemic data are the transportation and storage industries on one side (+759,000 jobs since February 2020), and personal and business services on the other (+880,000 jobs since February 2020). A record 551 million square feet (approximately 50 million square meters) of industrial space was absorbed over the 12 months from April 2021 to April 2022, resulting in a historically low vacancy rate. The impact is less on office absorption, however, as most of the service positions created offer telecommuting to their employees. Rental vacancy for office assets is approximately at March 2021 levels.
Healthcare and hospitality sector pushing hotel and senior housing. Occupancy rates for real estate assets in the healthcare, leisure and hospitality sectors are improving. The average price for a hotel room reached $150 in May, up 13% from May 2019. Senior living accommodations also saw rents increase 7.3% between the end of 2019 and April 2022.
MONETARY POLICY
Favorable job market allows Fed to continue to fight inflation. Consistent job growth and a historically low unemployment rate may give the Fed confidence that the economy can withstand another 0.75% rate hike at the end of the month. With about 1.9 job openings per applicant, demand is still far outstripping supply in the labor market, so the Fed may want to focus on fighting inflation rather than preserving job growth. The vast majority of other employment indicators are above standard.
Rising wages, another key factor in the Fed's decision making. By raising tomorrow's costs for employers, the central bank will create a drop in demand that should temper inflation by reducing wages. The average hourly wage rate was up 5.1% year-over-year in June, down from previous months, but still historically high. While higher wages allow employees to absorb the various economic shocks of the day, they simultaneously contribute to higher production costs and thus higher prices.
375,000
Average number of additional jobs per month in Q2 2022
190,000
Average number of additional jobs per month between 2015 and 2019
Source : Marcus & Milichap
0 Comments