Intelligent Investment

Economic Watch: Leisure & Hospitality Sector Leads February Surge in Job Growth

March 4, 2022 3 Minute Read

Executive Summary

  • The U.S. economy added 678,000 jobs in February, significantly above expectations of 440,000.
  • Leisure & hospitality gained 179,000 jobs, the most of any sector.
  • The labor participation rate increased to 62.3%, the unemployment rate fell to 3.8% and average hourly wage growth slowed, increasing by just 1 cent from the prior month. Wages were up 5.1% on a year-over-year basis.
  • Job growth in December and January was revised up by 92,000. The separate household survey showed a significantly higher number of new jobs in February, indicating that upward revisions for the month are likely.
  • CBRE expects the Fed to increase the federal funds rate by at least 25 basis points (bps) in March. Despite geopolitical uncertainty from the war in Ukraine, the U.S. economy remains strong and will support continued positive commercial real estate fundamentals.

Impacts on Commercial Real Estate


Office-using jobs increased by 130,000 in February. Professional & business services gained 95,000 and financial activities added 35,000. This bodes well for office demand, as improving public health conditions allow for fewer restrictions on office occupancy and a continued normalization of activity.


The warehousing & storage sector gained 10,700 jobs in February and manufacturing added 36,000. Overall employment levels indicate the labor market is in good condition and will continue to support consumption. Furthermore, CBRE expects industrial & logistics demand will remain strong as companies increase their inventories to mitigate supply chain disruptions.


Traditional retail gained 36,900 jobs in February, while food services & drinking places added 123,700. This reflects broad strength of the economy, which is supporting consumption. CBRE maintains a positive outlook for the retail sector as COVID risks decrease amid strong economic growth.


The construction sector added 60,000 jobs in February, with gains in both the residential and nonresidential sectors. Supply chain disruptions and labor shortages will remain problematic over the near term but the outlook remains positive, underpinned by strong economic growth and low interest rates.

Health Care

Health care gained 63,500 jobs in February. Ambulatory health care (outpatient services) added 53,600, while hospital employment increased by 2,700 and nursing & residential care gained 7,200. Strength in this sector is a positive sign that pandemic-related impacts on the labor market are easing.


Accommodation services added 27,500 jobs in February. CBRE expects continued strength in the hotel sector as leisure travel remains strong, international travel accelerates and business travel resumes.


Continued job growth that supports household formation, combined with housing affordability challenges, will maintain strong demand for multifamily real estate. CBRE also expects that urban multifamily assets will especially benefit from a normalization in work patterns and other activities amid lower COVID infection levels.

The Bottom Line

February job growth handily beat expectations. The strong household survey indicates that February’s total job creation will likely be revised upward over the next two months. Although wage growth is beginning to slow as more workers return to the labor force, it remains elevated at 5.1% year-over-year. As such, we expect the Fed will increase the federal funds rate several times this year, beginning with a hike of at least 25 bps this month.

Market volatility is likely in the near term due to the war in Ukraine. The most significant economic impacts will mainly be for Europe. We expect the U.S. economy will continue to expand and support real estate fundamentals and investment in 2022. However, heightened geopolitical tensions likely will intensify global inflation. It is also possible that in certain parts of the world, slow or negative GDP growth could accompany high inflation (called “stagflation”).