The March job report showed mixed results and the unemployment rate dipped to 4.5 percent, the lowest in a decade, while only 98,000 jobs were created. Poor weather in the Midwest during the survey period and a reduction in retail jobs exaggerated the softness in the headline number. Overall, the job market continued a long streak of monthly employment gains and several more data releases before the June Fed meeting will limit the March job report’s impact on the Federal Open Market Committee’s decision to lift rates.
The decline in retail jobs highlights the struggles that brick-and-mortar stores are facing as online retailers continue to grab market share. Amazon, the nation’s largest online retailer, announced plans to add 100,000 jobs from 2017 and mid-2018. That equates to roughly 1 out of every 40 new jobs expected to be created in the U.S. over that period. Amazon is also one of the leading technology companies in the world, and many of these positions will be high-paying tech jobs in Seattle and other major metros. However, most of the new employees will work in warehouses or logistics. These warehouses, which are generally in suburban locations, will support housing demand further from the city core.
Changing Retail Landscape to Redefine Suburban Housing Development
Old warehouse districts are ill-suited for today’s modern online retailers, which are forced to build new warehouses to accommodate the technology and trucks utilized today. As a result, expansive warehouses are replacing farmland and undeveloped tracts of land on the edges of major markets and employing thousands of workers. The relatively low compensation for these jobs limits the potential pool of workers to just a few miles. Therefore, nearby housing will be in high demand and attract single-family home investors to these areas.
Healthcare hiring also lost steam during March, though political maneuvering may be partially accountable for the slow rate of hiring. As a repeal of the Affordable Care Act was being debated on Capitol Hill, healthcare firms likely slowed hiring until clarity is achieved. Financial activities, on the other hand, added new positions as higher interest rates will give finance companies more operating capital. Wage growth, meanwhile, continued in the high-2 percent range, well above the inflation rate.