Office Users Drive July Jobs Gains

Labor Department headquarters in Washington, DC.

WASHINGTON, DC—A stronger-than-expected monthly jobs report contains especially good news for office landlords. The professional and business services sector added 70,000 positions in July, its best showing since last October, according to Labor Department statistics released Friday. The sector accounted for more than one quarter of the 255,000 nonfarm jobs added during the month. That compares to 38,000 professional and business services jobs added in June, although June’s adjusted tally of 292,000 was higher overall. Economists polled by Bloomberg Business had projected a median increase of 180,000 positions for July. Financial services, another key office-using employment sector had one of its strongest showings in the past several months as it added 18,000 jobs. Over the past year, financial services has added 162,000 positions. Also ranking high for job growth in July was the healthcare sector, with 43,000 new positions. That breaks down into gains in ambulatory health care Services, up 19,000 positions; hospitals, which added 17,000; and employment at nursing and residential care facilities, which grew by 7,000. “It’s rare to have a jobs report with a strong headline, yet so few blemishes in the details, and we got one today,” says Doug Duncan, chief economist at Fannie Mae. “With upward revisions to prior months’ job gains, annual wage growth tying a seven-year best, an improved participation rate, and a longer workweek, the report gives support to those on the Fed hoping to increase rates this year, especially if the numbers are supported in future releases.” The construction sector added 14,000 jobs in July to reach its lowest unemployment rate since October 2006. However, gains in the sector were driven by nonresidential construction, which added 11,500 positions, while residential construction was basically flat with just 700 positions added nationwide. “After several months of disappointing construction spending and employment data, today’s release was most welcome,” says Anirban Basu, chief economist with Associated Builders and Contractors. “If there is a slowdown in construction, it appears to be in residential as opposed to nonresidential activity.” Friday’s announcement from the Labor Department “provides evidence that the nonresidential construction recovery has not yet stalled.” Adds Duncan, “Strengthening job and wage growth are positives for the demand side of the housing market, but weak residential construction hiring is worrisome from a supply perspective. Together, these developments suggest continued strong home price appreciation.”