Strong US Job Growth Seen as a Positive Sign for Commercial Property
CoStar Analysis: But Pressure to Cut Interest Rates May Ease After Payrolls Grew More Than Expected
The U.S. labor market’s addition of 224,000 net new jobs in June, blowing past expectations and marking the nation’s 104th month of uninterrupted employment gains, is seen as a positive sign for commercial real estate. The national employment report released by the U.S. Department of Commerce was surprisingly strong, overcoming global trade uncertainties and slowing economic momentum in Europe and Asia. The new hiring will probably translate into more demand for office and industrial space.
However, the report will also temper expectations that the Federal Reserve will make multiple rate cuts in the second half of 2019, something that many investors had hoped would transpire. Despite the robust job growth, the U.S. unemployment rate ticked up to 3.7% as almost 160,000 people joined the labor force. The labor participation rate increased by one percentage point to 62.9%, not meaningfully different from where it’s been for three years. The participation rate for prime-aged workers ticked up to 82.2%, also a welcome sign.