May’s 223,000 net new jobs represented the 91st consecutive month of growth, further extending an already unprecedented expansionary cycle. Since early 2017, the change in employment compared to the previous cycle has been higher than growth in the civilian labor force, leading to rapid declines in unemployment, which now stands at just 3.8%. With the economy showing no meaningful signs of slowdown and inflation rising under the pressure of sustained output growth, the Federal Reserve is on track to continue its program of tightening over the coming quarters.
2. May 2018 U.S. labor market at a glance
2
+223,000
(91 consecutive months of growth)
1-month net change
+2,363,000
(+1.6% y-o-y)
12-month change
+939,000
10-year average annual growth
3.8%
Unemployment rate
6,550,000
(+16.8% y-o-y)
Job openings
-50bp
12-month change in unemployment
62.7%
Labor force participation rate
5,425,000
(+2.4% y-o-y)
Hires
3,344,000
(+6.4% y-o-y)
Quits
Source: JLL Research, Bureau of Labor Statistics
3. May job growth demonstrated unprecedented strength of the labor market at this point in the cycle
May’s 223,000 net new jobs represented the 91st consecutive month of growth, further extending an already unprecedented expansionary cycle. Given the
strength of recent jobs numbers at this point in the cycle, it is expected that the near-term will see similar levels of growth before demonstrating any signs of
cooling. As has been the case throughout 2018, the distribution of growth by sector has been relatively even; retail and construction are notably moving
upwards.
Without a meaningful increase in the rate of labor force expansion, job shortages will intensify
Since early 2017, the change in employment compared to the previous cycle has been higher than growth in the civilian labor force, leading to rapid declines in
unemployment, which now stands at just 3.8%. As a result, the labor market has entered a phase of severe job shortages, evidenced by a sharp boost in job
openings without similar gains in the rate of hiring. Despite these unfilled positions and intense competition for skilled employees, wage growth has only
moderately moved up to 2.7%, and disposable income growth is threatened by inflation accelerating to 2.5%.
Federal Reserve on track for continued tightening path
With the economy showing no meaningful signs of slowdown and inflation rising under the pressure of sustained output growth, the Federal Reserve is on track
to continue its program of tightening over the coming quarters. How much interest rate hikes will potentially cool the labor market and the broader economy
remains uncertain given the length of the current expansion.
May 2018 U.S. labor market highlights
3Source: JLL Research, Bureau of Labor Statistics
7. 3.0%
3.0%
3.4%
4.1%
4.4%
4.4%
4.5%
5.1%
5.1%
5.1%
0% 1% 2% 3% 4% 5% 6%
Mining and logging
Manufacturing
Construction
Trade, transportation and utilities
Other services
Financial activities
Information
Professional and business services
Leisure and hospitality
Education and health
Job openings rate (%)
Shortages of professional, education, health and
leisure employees are pushing openings rates past 5%
7Source: JLL Research, Bureau of Labor Statistics
9. -3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
12-month%change
Wage growth Inflation
Wage growth rose to 2.7% in May, but inflation is also
catching up at a similar rate of increase
9Source: JLL Research, Bureau of Labor Statistics
10. 1.5%
2.3%
2.3%
2.4%
2.4%
2.5%
2.8%
3.2%
3.3%
5.6%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
Manufacturing
Mining and logging
Professional and business services
Trade, transportation and utilities
Education and health
Leisure and hospitality
Other services
Construction
Information
Financial activities
12-month wage growth (%)
Outside of finance and information, the rate of wage
growth in most industries isn’t accelerating
10Source: JLL Research, Bureau of Labor Statistics
+3.7%
Office-using
wage growth
+2.4%
Non-office-using
wage growth
11. -8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
ChangesinceJanuary2007(%)
Civilian labor force Employed
Since 2017, employment growth has exceeded the labor
force, which will accelerate unemployment declines
11Source: JLL Research, Bureau of Labor Statistics
Employment growth
above
labor force growth
Employment growth
below
labor force growth
12. 62%
63%
64%
65%
66%
67%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Laborforceparticipationrate(%)The labor force participation rate has yet to improve,
dropping for the third consecutive month to 62.7%
12Source: JLL Research, Bureau of Labor Statistics
13. -1.1
4.0
4.2
5.0
6.0
8.0
13.0
18.0
18.7
21.0
25.0
31.0
31.1
39.0
-5 0 5 10 15 20 25 30 35 40 45
Utilities
Mining and logging
Wholesale trade
Government
Information
Financial activities
Other services
Manufacturing
Transportation and warehousing
Leisure and hospitality
Construction
Professional and business services
Retail trade
Education and health
1-month net change (thousands)
Retail trade continued its comeback in May, while
growth was equitably distributed across sectors
13Source: JLL Research, Bureau of Labor Statistics
14. -20.0
0.4
21.0
58.0
67.9
97.0
125.0
125.1
156.3
200.0
262.0
286.0
441.0
483.0
-100 0 100 200 300 400 500 600
Information
Utilities
Government
Mining and logging
Wholesale trade
Other services
Financial activities
Retail trade
Transportation and warehousing
Manufacturing
Leisure and hospitality
Construction
Education and health
Professional and business services
12-month net change (thousands)
Construction has risen to become the third-largest
contributor to annual job growth
14Source: JLL Research, Bureau of Labor Statistics
483.0
441.0
262.0200.0
125.0
726.9
PBS Education and health
Leisure and hospitality Manufacturing
Financial activities Retail trade
All other jobs
Core subsectors added 69.2 percent of all
jobs over the past 12 months.
15. -3%
-2%
-1%
0%
1%
2%
3%
2010 2011 2012 2013 2014 2015 2016 2017 2018
12-monthnetchangeAlthough retail trade has a long way to go, annual
sector growth is now approaching 1%
Source: JLL Research, Bureau of Labor Statistics 15
17. -300
-250
-200
-150
-100
-50
0
50
100
150
200
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
1-monthnetchange(thousands)
Professional and business services Financial activities Information
Office-using job creation is uniformly steady, growing
at the same rate YTD as in 2017
17Source: JLL Research, Bureau of Labor Statistics
18. -10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
12-month%change
Tech Energy, mining and utilities Office-using Total non-farm
Growth trends for niche sectors are beginning to
normalize at new, cooler levels
18Source: JLL Research, Bureau of Labor Statistics