What the 818K Downward Jobs Revision Means for CRE

The Bureau of Labor Statistics (BLS) has released its annual revision to jobs numbers, from April 2023 to March 2024. That was -818,000, or a 0.5% drop from the original estimates. This represents the biggest downward revision since 2009, according to The Hill. Typically, the annual change is 0.1% of the sum of the original reports. Last year’s estimate was a downward revision of 306,000 fewer jobs, according to LPL Financial.

There are two things to consider from the report. One is the likely impact on the September rate-cutting decision of the Federal Reserve’s Federal Open Market Committee. The other is changes in individual categories of jobs that might have an impact on real estate planning by companies.

Bill Adams, chief economist for Comerica Bank, pointed out in an emailed note that the revision implies an average monthly job growth of around 164,000 rather than the 209,000 the August 2, 2024, BLS jobs release claimed.

“This makes payrolls more consistent with the household survey’s uptick in unemployment over the last year,” Adams wrote. “Also, the regional detail of the July jobs report, released last Friday, shows that the month’s downside surprise was national and not just in regions affected by Hurricane Beryl.”

“Still, the preliminary downward revision suggests a weaker labor landscape and helps explain the most recent findings from a New York Fed survey, that consumers are worried about job security and the ability to find new jobs,” wrote LPL Financial chief global strategist Quincy Krosby in an emailed note. He said it also explained earnings warnings from big retailers that “consumers have become increasingly careful and discerning, seeking out value in their purchases.”

Depending on data in the August jobs report, published in early September, this could lead to the Fed being more likely to cut rates.

The other data that should interest people in CRE is the breakout of revisions by major industry sector. The single largest was a drop of 358,000, or 1.6%, in professional and business services, probably most affecting the office sector. Next was 150,000, or a loss of 0.9%, in leisure and hospitality, which could include lodgings and the restaurant and bar sector of retail. Manufacturing was down 0.9%, or 115,000, a part of industrial which has been seen as rising.

Some sectors had a more mixed reading. Trade, transportation, and utilities were revised downward by 0.4% or 104,000 jobs. Retail trade’s took a hit of 129,000, or 0.8%; wholesale trade’s declined 33,600, or 0.6%; but also transportation and warehousing that was up 56,400 or 0.8%; and utilities inched up 1,700, or 0.3%.