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CBRE Marketflash: September Employment

Unemployment falls to 4.1% as stagnant job growth figures temper optimism

Los Angeles CA— The California Employment Development Department (EDD) released new employment data for September 2017. The unemployment rate fell to 4.1%, down 60 bps from the previous month. The rate remained below the California rate of 4.7% and matched the U.S. rate of 4.1%. The household survey portion of the report, which combined with unemployment insurance (UI) claims is the instrument used to determine labor force participation and unemployment, showed promising signs for the local labor market. Unemployment claims were down by 8,100 (-11.1%) year-over-year, while the labor force increased by 11,400 (+0.7%). This indicates that many more are confident enough to join the labor force and those joining are finding employment, as well as those who were previously unemployed.

The payroll survey, which is used to determine industry employment, continued to yield some concerns. Year-over-year job growth slowed further to 1.1%, the lowest rate seen since February 2012. Private job growth also slowed to 1.1%, 30 bps below the U.S. average. Medical office and hospital users continued to be a bright spot, adding 4,200 jobs (+2.5%) which was 26.1% of the jobs added. (+2.6%). Government also continued to add jobs at an above-average pace, adding 3,500 jobs (+1.5%) or 24.2% of jobs added, mostly from local education. Department of Defense jobs continued to drop, down 2.6% or 600 jobs.

Office and industrial growth figures remained weak for the third straight month, which is concerning for the commercial real estate market. Office users added only 1,800 jobs (+0.6%) year-over-year, but financial activities (+4.3%) and architecture/engineering (+5.2%) continued to yield optimism. Industrial job growth picked up slightly, adding 2,300 jobs (+0.6%), but remained well below recent months. Losses were driven largely by manufacturing (-0.4%) and transportation & warehousing (-6.6%), industries that are being impacted by technological megatrends like automation, so the job market may not negatively impact industrial space demand. After a slow start to the year, retail and food service employment added 3,900 jobs (+1.2%), mostly from personal & laundry services, which added 2,100 jobs.

Figure 1:  Unemployment Rate

Figure 2:  Employment Growth in San Diego County

By User Type (09/2016 to 09/2017)

Source: U.S Bureau of Labor Statistics, California EDD, CBRE Research

By Geography (08/2016 to 09/2017)

Source: U.S Bureau of Labor Statistics, California EDD, CBRE Research

By Region (09/2017)

By Contribution to Job Growth

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