CommercialRealEstateIndex
BY LAWRENCE YUN, SENIOR VICE PRESIDENT AND
CHIEF ECONOMIST &
GEORGE RATIU, NAR DIRECTOR
QUANTITATIVE & COMMERCIAL RESEARCH, NAR
INDUSTRIAL GROWTH BOOSTS SIOR MARKET IN
FIRST QUARTER
2014
NAR ECONOMIC OVERVIEW
The first quarter GDP looks to be a downer just when the
economy seems to be picking up steam. The third estimate of
the Bureau of Economic Analysis’s gross domestic product
performance for last quarter showed a stronger-than-expected
performance. The fourth quarter 2013 GDP was revised
upward to 2.6 percent from 2.4 percent, on the basis of higher
consumer spending. But the impact of unusually snowy early
months and the sudden setback in exports seems to have
measurably slowed GDP growth in the first quarter.
However, the job market in the first quarter 2014 points to
improving conditions, despite the bouts of severe winter
weather. Payroll employment advanced over the quarter to the
tune of 533,000 new jobs. Added to the 7.7 million new jobs
created post recession, the U.S. economy is up 8.2 million jobs
from the 2008-09 trough. Of course, the recession led to the
destruction of 8.7 million jobs, so we still have a way to go
toward closing the gap.
Professional and business services provided the bulk of new
jobs during the first quarter of this year, accounting for 187,000
new positions. In a positive development, the construction
sector provided the second-highest number of new jobs—
88,000 positions. The leisure and hospitality sector came in
third, accounting for 83,000 new jobs, followed by education
and health services which generated 81,000 new jobs.
Wholesale trade, along with transportation and warehousing
added 39,900 and 18,000 new jobs, respectively. The two
sectors together accounted for one-in-ten new jobs during the
quarter, indicating rising demand in the industrial real estate
arena. Retail trade and the information industries lost jobs
in the first three months of the year, to the tune of 2,100 and
9,000, respectively. Government payrolls declined by 13,000
net jobs during the quarter, all at the federal level.
In spite of the gains, the unemployment rate remained
unchanged at 6.7 percent during the first quarter. Even more
importantly, the labor force participation rate remained well
below historical averages over the period, indicating that a
significant proportion of Americans continued to be completely
out of the labor force. Looking at the time period 2000-13, the
U.S. population has gained 34 million people. Over the same
period, the economy has added only 6.6 million net new jobs.
The road to sustainable employment growth seems to be a long
and winding one.
Several other economic indicators added wind into the
economic sails during the first quarter. Durable orders were
up 2.2 percent in February. Personal income rose 0.3 percent
during the same month. In February, factory orders increased
1.6 percent, exceeding analyst estimates. Auto sales ran at
slightly over 15 million annual sales in the first quarter. In
addition, equity markets advanced during the quarter, along
with residential real estate prices. In turn, consumer confidence
hit the highest value in March—82.3—since the first quarter
of 2008.
However, not all was bright during the first quarter.
Unemployment insurance claims rose into March, adding to
the number of people receiving unemployment insurance
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