Employment Tracker: Looking a Little Brighter

The outlook for the U.S. economy

has improved since the end of

2011. Various national and global

events have delivered positive news:

at the end of February the Dow

Jones Industrial Average surpassed

13,000, there was bipartisan

agreement on extending the federal

payroll tax cut, and European leaders

agreed on (another) Greek debt

rescue package. Labor markets

are slowly gaining steam while

large layoffs continue to decline.

The Bureau of Labor Statistics

(BLS) reported that mass layoffs in

January totaled 130,000 workers,

on a seasonally-adjusted basis.

That is the third lowest monthly

figure since the recent recession

began in December 2007.

But by no means are we “out of the

woods” yet regarding employment.

Continued domestic and

international political uncertainty

and a variety of economic

headwinds due to rising oil prices

present challenges to a speedier

recovery. Nonetheless, the U.S.

economy created 227,000 seasonally adjusted, non-farm jobs in February, according to the latest

employment report from the BLS.

This is the third consecutive month

of net job gains over 200,000,

which include upward revisions

to both December and January

employment figures. After flirting

with a retrenchment in payroll

growth this past summer, the U.S.

economy has added 201,000

monthly payrolls, on average, since

September. Although metropolitan

employment updates will not be

available until the end of March,

we expect the DC region to post

positive results.

DC ranks #5. The latest metropolitan

area employment figures show that

the DC region added 13,400 office-

using jobs on an annual basis in

20111. That is well below the almost

20,000 office payrolls added in

2010. Still, despite the Federal

Government having shed jobs in

the second half of the year, the DC

region ranked 5th among the top

metropolitan areas for office job

growth in 2011.

The most private sector jobs added since 2007. The DC Metro’s private

sector added almost 17,000 jobs in

2011, on par with pre-recession

2007 figures. On the other

hand, the public sector – which

includes federal, state, and local

governments – gained just 1,400

payrolls as the federal job machine

lost momentum throughout the year.

In fact, 2011 saw the slowest public

sector job growth in the DC Metro

since government employment

contracted in 1998. Although

both the public and private sectors

are important to the DC Metro’s

employment markets, it is private

sector job growth that more closely

correlates with commercial office Copyright © 2012 Cassidy Turley. All rights reserved.

March 2012

-20 -10 0 10 20 30

San Francisco (10)Minneapolis (9)

San Diego (8)San Jose (7)Houston (6)

Washington, DC (5)Los Angeles (4)

Seattle (3)New York, NY (2)

Dallas (1)

2011 2010

13,400 jobsin 2011

Top Office Job Producing Markets Total Nonfarm, Annual Job Growth/Loss, 000s

Sources: BLS, Moody’s Economy.com

-80

-60

-40

-20

0

20

40

60

80

100

120

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Private Sector Fed/ State/ Local Gov't

Private Sector Delivers Growth Public & Private Sector Employment, Annual

Change, 000s

Source: Bureau of Labor Statistics

space demand (r=0.67). Thus, it

is key that the private sector deliver

sustained employment growth in

order for the region to experience

robust net demand for office space.

Private businesses drive growth. DC

Metro’s professional and business

services (PBS) sector – a key user

of office space – added 11,900

payrolls in 2011. This is the largest

employment gain of any sector in

2011 and the largest increase for

the PBS sector since 2006. While

still below historical averages, it

indicates that private businesses

are starting to slowly hire in the DC

region. And more of those jobs are

full-time positions. In 2011, one

in ten of PBS payrolls added were

temporary jobs compared to two in

ten such jobs in 2010.

Industrial employment – which

includes the manufacturing and

transportation, warehousing, and

utilities sectors – continued to shrink

over the course of 2011, shedding

2,300 payrolls during the year. Still,

the transportation, warehousing,

and utilities sector delivered

positive, albeit small, job growth

adding 200 jobs—the first positive

gain since 2003. As the local and

national economies continue to

strengthen, a boost in demand

for goods and services eventually

will drive employment and thus

demand for industrial/warehouse

space due to increased production,

distribution, and inventories.

Employment prospects slowly improve. DC Metro added 18,400

non-farm payrolls in 2011. BLS

revised this figure upward once

already, and is expected to revise it

upward again in light of the positive

national figures. The regional outlook

for 2012 employment mirrors the

job growth trends in 2011, although

net job creation will still be only half

of the 20-year historical average.

While the Federal Government

contributed positively to job growth

in 2011, it will be a drag on regional

employment in 2012. The Federal

Government will continue to right-

size–mostly through attrition and

retirement during the next year.

Private sector businesses will hire

slowly throughout the coming

12 months, and most will hire

cautiously due to political and

economic uncertainties. In 2012,

expect legal and lobbying firms as

well as corporate government affairs

operations to drive employment

gains in the downtown markets,

while information technology,

finance and healthcare will propel

suburban employment gains.

For more information contact:

Jeffrey KottmeierVice President, Director of Research

DC Region

202.463.2100

-3,100

-2,500

-1,500

200

700

800

2,400

2,500

4,700

5,000

11,900

-4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

Other Services

Manufacturing

Information

Transport & Utilities

Federal Government

State & Local Gov't

Retail Trade

Financial Activities

Leisure & Hospitality

Education & Health

Prof. & Bus. Services

Employment Growth/Decline by IndustryDC Metro, 2011 vs. 2010

Source: Bureau of Labor Statistics

18,400 17,400

33,100

42,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2011 2012 2013 2014

20 Year Historical Average

Slow but Steady Growth for 2012DC Metro Annual Job Growth

Source: BLS, Cassidy Turley Research

1 Jan-Dec 2011 compared to Jan-Dec 2010

Copyright © 2012 Cassidy Turley. All rights reserved.