Executive Summary

 

• 273,000 jobs were created in February, far surpassing expectations of 175,000.
• Strong employment growth occurred despite the late-January emergence of coronavirus in the U.S., which accelerated by late February and caused dramatic stock market volatility.
• December and January employment reports were revised upward by a combined 85,000 jobs, putting the three-month average at a very strong 243,000 per month.
• The unemployment rate fell a tenth of a point to 3.5%, while the labor force participation rate remained at 63.4%.
• Average hourly earnings grew by 3.0% over the past 12 months.
• February marked 113 consecutive months of job growth—the longest stretch in U.S. history—and the unemployment rate returned to a 50-year low.

Commercial Real Estate Highlights

The Bottom Line

February’s jobs report showed the U.S. labor market was in an extremely strong position heading into a period of heightened uncertainty over the coronavirus outbreak. Strong gains were widespread across sectors, with office-using jobs rising the most.

Although economic growth will be impacted by the current drop in confidence, a historically tight labor market will make companies hesitant to reduce payrolls. If the coronavirus outbreak eases before the end of Q2, only a small non-recessionary impact on the labor market is likely.

Property markets are well-positioned heading into this period of uncertainty, but there will be some impact to the hotel and retail sectors. Even after its half-point emergency reduction in interest rates on March 3, the Fed has significant further capacity (i.e., further rate cuts or balance sheet expansion) to act forcefully in response to downside risks.

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