The “Employment Situation Report”
The U.S. Bureau of Labor Statistics puts out the “Employment Situation Report.” It contains all sorts of important data points regarding the state of the labor market—from payroll data to the unemployment rate, the labor force participation rate, average hourly earnings, average weekly hours, and other key points.
These data are also broken down by demographics, making this report an important tool for investors. Check out the end of the report, where you’ll find links to all sorts of tables and historical data.
The establishment and household surveys
The “Employment Situation Report” is based on data from the following two surveys:
- The Current Population Survey, also known as the household survey
- The Current Employment Statistics Survey, also known as the establishment survey
The household survey provides information on the labor force, employment, and unemployment. The establishment survey covers employment, hours, earnings, and payrolls. The household survey covers the entire non-institutionalized civilian population, while the establishment survey covers people working in the private sector or government.
In December, payrolls increased by 252,000, well in excess of Wall Street’s expected 240,000. The ADP survey, prepared by ADP, LLC, predicted the number would come in at 241,000. But the ADP numbers predict the final revisions, not the initial survey.
Private payrolls increased by 228,000, and manufacturing payrolls rose by 17,000. Construction payrolls rose 48,000, a big jump.
Implications for office REITs
Vacancy rates drive office REITs (real estate investment trusts) including Vornado Realty Trust (VNO), SL Green Realty Corporation (SLG), Boston Properties (BXP), Douglas Emmett (DEI), and Highwoods Properties (HIW).
Vacancy rates are a function of new business creation and the expansion of existing businesses. Increasing employment numbers are good news for these REITs. They’ll help push down vacancy rates, which are still at elevated levels following the Great Recession. As the economy improves and vacancy rates fall, office REITs could outperform the S&P 500 (SPY).