Intelligent Investment

Economic Watch: Leisure & Hospitality Sector Leads Broad Job Growth in May

June 3, 2022 3 Minute Read

Executive Summary

  • The U.S. added 390,000 jobs in May, above expectations of 328,000.
  • Leisure & hospitality’s gain of 84,000 jobs was the most of any sector.
  • The labor force participation rate increased slightly to 62.3% and the unemployment rate remained at 3.6%. Wages rose 5.2%.
  • Job growth in March was revised down to 398,000 from 428,000 and April growth was revised up to 436,000 from 428,000.
  • Rapid job growth and persistent inflation likely will cause the Fed to increase the federal funds rate by 50 basis points (bps) in June and July, with the possibility of another 50-bp increase in September.
  • CBRE expects that continued job growth will support real estate fundamentals in the near term, but rising interest rates will weigh on economic growth in the second half of the year.

Impacts on Commercial Real Estate


Office-using jobs increased by 83,000 in May. Professional & business services gained 75,000 and financial activities added 8,000. Improved public health conditions were another positive sign for the office sector, evidenced by a drop in the share of employees who telework to 7.4% in May from 7.7% in April.


The warehousing & storage sector gained 17,700 jobs in May and manufacturing added 18,000. CBRE expects demand for industrial & logistics space will remain strong as companies increase their inventory to mitigate supply chain disruptions.


Traditional retail lost 60,700 jobs in May, while food services & drinking places added 46,100. The coinciding drop in retail jobs and increase in food services and accommodation jobs may be signaling a shift from goods to services spending. CBRE maintains a positive outlook for the retail sector, but consumer spending may weaken later this year due to inflation and rising interest rates.


The construction sector added 36,000 jobs in May. Nonresidential building construction added 2,400 jobs and residential added 5,000. The industry will see continued headwinds throughout the year from higher labor and materials costs, as well as a slower housing market.

Health Care

Health care gained 28,300 jobs in May. Ambulatory health care (outpatient services) added 6,400, while hospitals gained 16,300 and nursing & residential care added 5,600. With favorable long-term demographics and fewer pandemic-related disruptions, demand for health care properties should remain positive.


Accommodation services added 21,400 jobs in May. CBRE expects continued strength in the hotel sector as leisure, international and business travel all accelerate. The hotel sector also will benefit from a shift in consumer spending from goods to services.


Strong job growth continues to support multifamily demand. Additionally, higher interest rates are exacerbating already high home prices, which will make rental housing more attractive.

The Bottom Line

Continued strong job growth will support consumer spending and economic growth. Fears of higher prices causing pronounced wage inflation will keep the Fed on track to tighten monetary policy. We expect the Fed to increase interest rates by 50 bps in June and July and possibly another 50 bps in September if the job market does not slow. In addition, the Fed will shrink its balance sheet as the bonds in its portfolio mature over time.

CBRE expects that the rate of job and wage growth will slow over the coming months due to tightening financial conditions. This, coupled with easing supply chain disruptions, should slow the rate of inflation in the second half of the year. While we do not expect a recession over the next 12 months, we expect sluggish economic growth and weaker consumer sentiment. Real estate fundamentals will remain reasonably well supported, but real estate capital markets will be less active and there will be some decline in commercial real estate values.