ance of trade. These trends bode well for industrial
space occupancy.
Looking at other indicators of business performance, they mirrored improved conditions in the
second quarter. The Institute for Supply Management
indexes for manufacturing and services advanced
at a faster pace than expected, reaching values of
55. 4 and 56.0. Values over 50.0 indicate improving
conditions.
However, the looming costs and uncertainty of
the coming Patient Protection and Affordable Care
Act are certainly keeping businesses cautious.
Business savings—cash in reserves—reached new
records in the first quarter, as corporate real profits after tax posted $1.7 trillion in the first quarter.
Businesses continue to stockpile cash reserves as a
hedge against uncertainty and increased costs.
That uncertainty is also illustrated in the employment numbers. Payroll employment in the second
quarter gained 563,000 jobs, a lower figure than the
first quarter’s 622,000. July’s employment figure of
162,000 disappointed expectations and indicated
a slowdown in hiring during the first month of the
third quarter. On the flip side, employment remained
positive and the economy is making progress toward
closing the post-recession gap. The unemployment
rate declined from 7. 7 percent in the first quarter to
7. 6 percent in the second, and then to 7. 4 in July.
However, part of the decline is attributable to a lowering of the labor force participation rate.
Looking at the other major component of
GDP—government spending—the decline slowed,
shrinking 0.4 percent in the second quarter, as the
“sequestration” took effect. At the federal level,
spending declined 1. 5 percent. Following three
years of cuts, spending at the state and local levels is
showing signs of stabilization, posting a 0.3 percent
increase in the second quarter.
The outlook for the remainder of 2013 is for GDP
to grow at a 1. 6 percent annual rate. Payroll employment is expected to rise 1. 5 percent, leading to a net
2. 4 million new jobs for the year.
SIOR Index Results
With a moderately growing economy, office and
industrial properties recorded a strong improvement in market conditions during the second quarter of the year. Buoyed by strong corporate balance
sheets, large cash reserves and steady consumer
spending, the SIOR Commercial Real Estate Index,
representing second quarter 2013 data, increased
11. 7 points. The national index, based on 10 variables pertinent to the performance of U.S. industrial
and office markets, closed at 93.4, the highest value
since the fourth quarter of 2007. The office sector
gained 8. 6 points to an index value of 84.7, following employment gains in business and professional
Continued
-70 -60 - 50 - 40 - 30 - 20 - 10 0 10 20 30
Cars
Midsize
Small
Luxury
Large
Light-duty trucks
Pickup
Cross-over
Minivan
Midsize SUV
Large SUV
Small SUV
Luxury SUV
Vehicle Sales April 2013 (% Chg Yo Y)
Source: www.motorintelligence.com
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
SIOR Index
Northeast Midwest South West
Source: SIOR, NAR
- 10.0
- 8.0
- 6.0
- 4.0
- 2.0
0.0
2.0
4.0
6.0
-100
- 50
0
50
100
150
P
er
c
en
ta
ge,
An
n
u
a
l
R
a
te
I
n
dex
Va
l
ue
GDP SIOR Index
Sources: SIOR, BEA
0
20
40
60
80
100
120
20
06
-
Ja
n
200
6-
Ap
r
20
06
-
Ju
l
2006
-
Oct
20
07
-
Ja
n
200
7-
Ap
r
20
07
-
Ju
l
2007
-
Oct
20
08
-
Ja
n
200
8-
Ap
r
20
08
-
Ju
l
2008
-
Oct
20
09
-
Ja
n
200
9-
Ap
r
20
09
-
Ju
l
2009
-
Oct
20
10
-
Ja
n
201
0-
Ap
r
20
10
-
Ju
l
2010
-
Oct
20
11
-
Ja
n
201
1-
Ap
r
20
11
-
Ju
l
2011
-
Oct
20
12
-
Ja
n
201
2-
Ap
r
20
12
-
Ju
l
2012
-
Oct
20
13
-
Ja
n
201
3-
Ap
r
20
13
-
Ju
l
Consumer Confidence Consumer Sentiment
Sources: The Conference Board, University of Michigan
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
SIOR Index
Northeast Midwest South West
Source: SIOR, NAR
- 10.0
- 8.0
- 6.0
- 4.0
- 2.0
0.0
2.0
4.0
6.0
-100
- 50
0
50
100
150
Per
ce
nt
age
,
A
n
n
ua
l
Rate
I
n
dex
Va
l
u
e
GDP SIOR Index
Sources: SIOR, BEA
