Bureau of Labor Statistics (BLS) posted its preliminary July employment numbers by metropolitan area. At the national level, the employment report for July was mixed with nonfarm payroll growth exceeding expectations while the unemployment rate inched up to 8.3%.
Monthly nonfarm payrolls increased by 163,000 jobs in July, which beat the expectation of 100,000 jobs per month. June’s estimate was revised downward, from 80,000 to 64,000 jobs, resulting in an average employment growth of only 73,000 per month in the second quarter of the year, as compared to an average monthly increase of 226,000 in the first quarter.
Employment growth during July was led by an increase of 49,000 professional and business services jobs, which consisted largely of temporary help services (+14,000) and computer systems design (+7,000) jobs. Leisure and hospitality employment increased by 29,000 in July, and by 292,000 jobs over the past twelve months. Manufacturing employment increased by 25,000 jobs, almost all of which was in the durable goods manufacturing sector. Health care employment continues to trend up growing by 12,000 jobs in July. Utilities employment declined in July, while all other industries showed little or no change for the month.
What is the takeaway? The better-than-expected July jobs report eases some of the worry over a stalling economy. However, we are sticking with our “slower employment recovery” thesis for the remainder of 2012 as the U.S. economy needs to add at least 125,000 jobs per month just to keep up with population growth, and more than 200,000 new jobs per month are needed to put a real dent in the unemployment number. Also, the unemployment rate remained elevated in July due to a decrease in labor force participation which was 63.7%. According to the Current Population Survey labor force status flows, only 0.5% of unemployed workers became employed, with the number of workers flowing out of the labor force increasing by 0.5% in July.
Despite the structural issues surrounding employment growth, the apartment market’s fundamentals remain strong, though the growth rate has moderated compared to 2011. For the nation, annual effective rent growth in July stood at 3.65% (year-to-date rent growth through July was 4.34%). Occupancy remained unchanged from May through July at 94.3%. Furthermore, though new supply is picking up compared to last year for most metropolitan statistical areas (MSAs), it remains well below its historical levels. We are expecting new supply deliveries to reach historical levels for most metro areas by the latter half of 2014.
The top five annual job producers (NSA) during July 2012 were Houston (+83,700), New York (+78,600), Los Angeles (+58,900), Boston (+52,800), and Phoenix (+48,500) whereas Edison (-4,300), Providence (-4,100), Greenville (-3,100), Trenton (-3,000), and Augusta (-2,900) lost jobs during July 2012 and rank at the bottom of the list.
Source: Axiometrics E-News