August 2018 U.S. employment update and outlook

National employment
situation: July 2018
August 3, 2018

July 2018 U.S. labor market at a glance
2
+157,000
(93 consecutive months of growth)
1-month net change
+2,400,000
(+1.6% y-o-y)
12-month change
+987,000
10-year average annual growth
3.9%
Unemployment rate
6,638,000
(+16.7% y-o-y)
Job openings
-40bp
12-month change in unemployment
62.9%
Labor force participation rate
5,754,000
(+4.9% y-o-y)
Hires
3,561,000
(+10.4% y-o-y)
Quits
Source: JLL Research, Bureau of Labor Statistics

Slower, but still positive, growth marked July after a string of very strong months
July saw the labor market add 157,000 net new jobs, slower than growth in recent months but still positive and healthy overall. A 13,000-job contraction in
government employment, combined with a 5,000 financial activities jobs lost in net terms, were partially responsible for this slowdown. At the same time,
sustained talent shortages across markets continue to keep growth more volatile than normal.
Metropolitan area-level unemployment rates reaching critical low
While the national unemployment rate dropped by 10 basis points back to 3.9 percent and total unemployment by 30 basis points to 7.5 percent, unemployment
rates in a number of primary and secondary markets have fallen even lower to critical levels. In the Bay Area, San Francisco and Silicon Valley now report
unemployment of only 2.6 and 3.0 percent, respectively, while Denver, Nashville and Salt Lake City have dropped below the 3.5-percent mark. In high-cost
gateway geographies dependent on immigration, policy changes may exacerbate employers’ challenges to expand headcounts.
Employee confidence keeps trending upward, even though wage growth isn’t matching
The quits level – a key measure of employee confidence – continues to rise unabated, hitting nearly 3.6 million in a record-high reading. This comes at the same
time as job openings far outpace hiring, indicating solidifying confidence from workers in the labor market. At the same time, wage growth remains somewhat
elusive and stuck at 2.7 percent, even as unemployment is at cyclical lows and inflation approaches 3.0 percent.
July 2018 U.S. labor market highlights
3Source: JLL Research, Bureau of Labor Statistics

0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1-monthnetchangeAfter a slew of strong monthly increases, July was
more subdued with 157,000 net new jobs
Source: JLL Research, Bureau of Labor Statistics 4

0%
2%
4%
6%
8%
10%
12%
-1,000
-800
-600
-400
-200
0
200
400
600
Unemploymentrate(%)
1-monthnetchange(thousands)
1-month net change Unemployment rate
Unemployment dropped back to 3.9% as the spike in new
entrants a month ago became employed

2,000
3,000
4,000
5,000
6,000
7,000
8,000
Jobopenings(thousands)Job openings decreased slightly, but are still near
record highs above 6.6 million

3.3%
3.4%
3.8%
3.9%
4.4%
4.5%
4.8%
4.9%
5.3%
5.4%
0% 1% 2% 3% 4% 5% 6%
Construction
Manufacturing
Financial activities
Other services
Information
Trade, transportation and utilities
Mining and logging
Education and health
Leisure and hospitality
Professional and business services
Job openings rate (%)
Openings rates continue to show divergence between
service-providing and goods-producing industries

1,000
1,500
2,000
2,500
3,000
3,500
4,000
Quits(thousands)Quits have surpassed previous peak and continue to
trend upwards due to firming employee confidence

-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 has hardened at 2.7%, not enough to
counter near-3% inflation

1.0%
1.3%
2.1%
2.3%
2.4%
2.5%
2.9%
3.2%
3.3%
4.3%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
Mining and logging
Manufacturing
Trade, transportation and utilities
Other services
Information
Construction
12-month wage growth (%)
Office-using wage growth slowed by 30bp in July,
particularly due to a pause in information wages
+3.2%
Office-using
wage growth
+2.5%
Non-office-using
wage growth

-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
Employment growth
above
labor force growth
Employment growth
below
labor force growth

62%
63%
64%
65%
66%
67%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Laborforceparticipationrate(%)The labor force participation rate continues to hover
between 62.7% and 63.0%

-13.0
-5.0
-5.0
-4.0
-2.8
-1.3
0.0
7.1
12.3
19.0
22.0
37.0
40.0
51.0
-20 -10 0 10 20 30 40 50 60
Government
Other services
Mining and logging
Utilities
Transportation and warehousing
Information
Retail trade
Wholesale trade
Construction
Manufacturing
1-month net change (thousands)
Unexpected contractions in finance, transportation and
warehousing pulled down July’s gains

-21.0
-3.4
8.0
53.0
76.9
86.4
89.0
106.0
160.9
254.0
308.0
327.0
427.0
518.0
-100 0 100 200 300 400 500 600
Information
Utilities
Government
Mining and logging
Wholesale trade
Retail trade
Other services
Transportation and warehousing
Construction
Manufacturing
12-month net change (thousands)
Manufacturing overtakes construction in annual job
creation, while retail is back in positive territory
518.0
427.0
254.0327.0
106.0
681.6
PBS Education and health
Leisure and hospitality Manufacturing
Financial activities Retail trade
All other jobs
Core subsectors added 71.6 percent of all
jobs over the past 12 months.

-3%
-2%
-1%
0%
1%
2%
3%
2010 2011 2012 2013 2014 2015 2016 2017 2018
12-monthnetchangeAnnual employment growth in retail trade has now
been positive for most of 2018
Source: JLL Research, Bureau of Labor Statistics 15

0%
1%
2%
3%
4%
5%
6%
Unemploymentrateforbachelor’sdegreeholders(%)Bachelor’s degree unemployment continues to show
no meaningful change at 2.2%

-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
51,000 new professional and business services jobs
helped to counter losses in finance in July

-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
Across sectors, annual growth levels are unchanged
apart from energy, which is continuing its rebound

200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
Initialunemploymentclaimsperweek
Intial weekly claims 4-week moving average
Initial unemployment claims remain on a downward
trend even as they approach the 200,000 mark
19Source: JLL Research, U.S. Department of Labor

0
20
40
60
80
100
120
140
ConsumerconfidenceindexConsumer confidence remains near record highs in the
face of protectionist policy and rising inflation
20Source: JLL Research, Conference Board

0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
12-month%change
Total unemployment 10-year average
Total unemployment dropped sharply by 30bp to 7.5%,
a new cyclical low

August 2018 U.S. employment update and outlook

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