December 2011

Employment Tracker: Temps, Tech and Retail Drive D.C. Metro Employment
The U.S. economy continued to add jobs at a steady pace. The latest employment report from the Bureau of Labor Statistics announced an additional 120,000 non-farm payrolls in November. This is close to the monthly average of 131,000 added over the year. Positive news is that non-farm payrolls for September and October were revised up significantly. September was revised from 158,000 to 210,000, and the change for October was revised from 80,000 to 100,000. Energy-centric Texas markets continued to dominate office employment gains with four cities boasting job growth of approximately 13,000 jobs compared with that of a year ago. Those markets include the D.C. region, which ranked 5th among the top metro areas for office job growth. Despite a slowdown in
Office Using Employment Growth
Top 10 Metros, Oct 11 vs Oct 10
Dallas (1) Houston (2) Chicago (3) Tampa (3) Seattle (4) Washington, DC (5) New York City (6) Los Angeles (7) Louisville (8) San Francisco (9)
0 5 10

government hiring, D.C. metro has added 13,100 office-using jobs on a year-over-year basis, compared to only 5,800 jobs added during the same time period in 2010. The D.C. region surpassed the number of office jobs added in New York City (ranked 6th) despite the fact that the total employment base in the D.C. region is half that of NYC.

Private Sector Drives Employment

DC Metro, Year over Year Change
60
Employment Chg (thousands)

50 40 30 20 10 0 -10 Jan-11 Feb-11 Mar-11 Apr-11 May- Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 11 Federal Govt Financial Activities

Total Non Farm Professional & Business Serv

Source: BLS, Moodys Economy.com

Private Sector Grows, Public Sector Continues to Disappoint

D.C. regional employment continued to gain momentum driven primarily by the private sector. Professional and Business Services added 10,400 jobs, on a year-overyear basis in line with the 10-year average. Financial Activities added 2,000 jobs, reflecting continuing improvement in that sector after four consecutive years of downsizing. At the same time, the public sector continued to contract, shedding 4,500 jobs year over year. Keep in mind that one year ago temporary Census workers were included in federal employment figures and that made federal employment seem abnormally high. That being

said, we still expect to see federal rightsizing due to a continued focus on national debt reduction. We expect limited federal hiring activity throughout the upcoming election cycle in 2012.

Temps, Tech and Retail Drive Growth

The Employment Services sector, which includes temporary employment, added 15,700 jobs over the past 12 months. This is good news since companies hire to meet increased demand for goods and services. The downside is that not all of those temporary positions have been converted into permanent ones. We do, however, expect that such temporary positions will eventually translate into permanent jobs, albeit at a slow, steady pace. Another bright sign is that employ-

20.8 18.6 13.3 13.3 13.2 13.1 12.2 11.9 10.4 10.2
15 20 25

Employment Gains (thousands)

Source: Bureau of Labor Statistics

Copyright 2011 Cassidy Turley. All rights reserved.

ment in computer systems design is outpacing its historical growth rates, indicating strong demand for IT-related services. This bodes well for office space demand, especially for the tech-focused Northern Virginia market. Despite low consumer confidence figures, consumers are spending. As retail sales improved, retail employment continued to gain strength. Retail payrolls increased by 4,100 year to date the largest increase since 2005. If we include the employment gains in 2010, the retail sector is almost half way to recovering the 13,000 jobs lost during the core recession years of 2008 and 2009. Initial sales figures for this years holiday shopping also look positive. Well have to wait and see if retail maintains momentum through the first of the year.
Temp, Tech & Retail Employment Grow
DC Metro, Jan-Oct 2011 vs. Jan-Oct 2010

Maryland Keeps Pace

Northern Virginia (NoVA) continues to add the most jobs among individual markets in the region (10,300 jobs year to date) and the District added 2,500 jobs. Still, both NoVA and the District are adding fewer jobs than normal. Suburban Maryland added the fewest number of net new jobs in the region (1,700 jobs), although that exceeds its 10year average of 1,500 jobs. Much of Suburban Marylands growth has been fueled by a surge in education and healthcare employment.

Employment Continues to Improve, Though Debt Debacle Affects Market

Employment is a lagging indicator of how well the economy is performing. Even though businesses are posting record profits and have maximized worker productivity, they are cautiously hiring permanent workers across the region. The private sector will continue to add jobs over the next 12 to 18 months, albeit at a slow pace. Alternatively, the Federal Government will continue to right-size through the elections next year and remain a drag on regional employment. The failure of the deficit
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reduction Super Committee has initiated automatic cuts in federal spending. Implications for the D.C. region (as well as the nation) are still uncertain. First, federal budget cuts do not take affect until January 2013. Between now and then, the country will hold national elections and much can change. Additionally, it is still unclear how much the automatic cuts will affect the D.C. area. Still, federal contractors are likely to be somewhat skittish in making hiring and long-term leasing decisions. In the near term, this will translate into renewals and short-term leases.
Regional Employment Growth
25,000 20,000 15,000 10,000 5,000 0
2,500 1,700 10,300 6,000 1,500

14,700

YTD 2011 DC NoVA

10 Yr Avg Suburban MD

Source: Bureau of Labor Statistics

Employment Services

15,700

Computer Systems Design

6,800

For more information contact: Jeffrey Kottmeier Vice President, Director of Research DC Region

Retail Trade

4,100
-10,000 -5,000 0 5,000 10,000 15,000 20,000

-15,000

2011 vs 2010

10 yr average

Source: Bureau of Labor Statistics

U.S. Research
Copyright 2011 Cassidy Turley. All rights reserved.

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