September 2018 U.S. employment update and outlook

National employment
situation: August 2018
September 7, 2018

August 2018 U.S. labor market at a glance
2
+201,000
(94 consecutive months of growth)
1-month net change
+2,330,000
(+1.6% y-o-y)
12-month change
+1,012,000
10-year average annual growth
3.9%
Unemployment rate
6,662,000
(+8.8% y-o-y)
Job openings
-50bp
12-month change in unemployment
62.7%
Labor force participation rate
5,651,000
(+3.7% y-o-y)
Hires
3,402,000
(+7.5% y-o-y)
Quits
Source: JLL Research, Bureau of Labor Statistics

August job growth once again passed the 200,000 mark
With 201,000 net new jobs, August rebounded after a slower July, aided by growth in a variety of sectors, most notably a resurgence in transportation,
warehousing and wholesale trade. Without an acceleration in the expansion of the labor force, however, unemployment is still at a cyclical low of 3.9 percent,
leaving corporates with minimal slack for expansion and recruitment. As a result, job openings have surged by 8.8 percent over the year to a record high of
nearly 6.7 million.
Wage growth edged up, but inflation is still negating gains
Wage growth rose by 20 basis points to 2.9 percent in August, above the 2.7-percent rate that it was stuck at for much of 2018 even as talent shortages have hit
nearly every market. At the same time, rising inflation (also at 2.9 percent and trending upwards) is negating real income gains, while rising prices for goods
and services are likely to place pressure on consumer spending and, in turn, GDP growth. Notably, financial activities saw wage growth slow to 0.8 percent,
although this is likely an aberration.
Outlook for the Fed is highly positive even as headwinds remain
The Federal Reserve is highly likely to continue on its track of incremental tightening given an overall positive picture of the strength and resilience of the labor
market. External confidence metrics – both business and consumer – are at or near record-highs as well. Wage growth remains below expectations, and it will
have to be seen if the 20-basis-point increase in August is the start of a longer, upward trend.
August 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-monthnetchangeAugust saw robust growth of 201,000 net new jobs,
although previous months were revised downwards
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 has firmed at 3.9% as the labor force
struggles to improve expansion

2,000
3,000
4,000
5,000
6,000
7,000
8,000
Jobopenings(thousands)Job openings appear to be stabilizing at a record high
6.6 million

2.9%
3.4%
3.5%
3.7%
4.1%
4.1%
4.3%
4.4%
5.1%
5.2%
0% 1% 2% 3% 4% 5% 6%
Other services
Education and health
Construction
Manufacturing
Information
Mining and logging
Financial activities
Trade, transportation and utilities
Professional and business services
Leisure and hospitality
Job openings rate (%)
PBS’ job openings bounced remains above 5%,
weighing on headcount and footprint growth

0%
1%
2%
3%
4%
5%
6%
Unemploymentrateforbachelor’sdegreeholders(%)Bachelor’s degree unemployment is back at its cyclical
low of 2.1%; unlikely to fall further

1,000
1,500
2,000
2,500
3,000
3,500
4,000
Quits(thousands)Quits continue to hover around the 3.5-million mark,
indicating strong worker leverage

-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
After months of stability, wage growth finally rose an
additional 20bp to 2.9% in August

0.8%
2.0%
2.6%
2.6%
2.7%
2.9%
3.1%
3.3%
3.6%
3.8%
0% 1% 2% 3% 4%
Other services
Mining and logging
Manufacturing
Trade, transportation and utilities
Construction
Information
12-month wage growth (%)
Wage growth for financial activities, typically among
the highest sectors, paused in August
+2.5%
Office-using
wage growth
+2.8%
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
Both the labor force and total number of employed
Americans dipped in August, but gap is widening
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(%)Labor force participation remains unstable, falling back
to 62.7% in August

-6.0
-5.9
-3.0
-3.0
0.3
6.0
11.0
13.0
13.0
20.2
22.4
23.0
53.0
53.0
-10 0 10 20 30 40 50 60
Information
Retail trade
Government
Manufacturing
Utilities
Mining and logging
Other services
Transportation and warehousing
Wholesale trade
Construction
1-month net change (thousands)
Wholesale trade and transportation bounced back in
August, contributing 42,600 jobs

-30.0
-3.3
1.0
41.0
56.0
62.0
90.0
98.9
111.0
172.7
253.0
254.0
449.0
519.0
-100 0 100 200 300 400 500 600
Information
Utilities
Government
Construction
Mining and logging
Retail trade
Other services
Wholesale trade
Transportation and warehousing
Manufacturing
12-month net change (thousands)
Compared to previous months, annual growth was
more evenly distributed in August
519.0
449.0
172.7254.0
111.0
62.0
762.3
PBS Education and health
Leisure and hospitality Manufacturing
Financial activities Retail trade
All other jobs
Core subsectors added 67.3 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-monthnetchangeRetail trade’s growth remains below-average, but has
continually been in positive territory in 2018
Source: JLL Research, Bureau of Labor Statistics 16

-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
A rebound in PBS countered against continued
contraction in information

-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 have hit their lowest level
this cycle (203,000) and show no sign of slowing
19Source: JLL Research, U.S. Department of Labor

0
20
40
60
80
100
120
140
160
ConsumerconfidenceindexConsumer confidence jumped back to a new record
high of 133.4 points
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
UPDATE

September 2018 U.S. employment update and outlook

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