Intelligent Investment

Economic Watch: November Wage & Job Growth Keeps Fed Hawkish

December 2, 2022 3 Minute Read

Executive Summary

  • The U.S. added 263,000 jobs in November, beating consensus expectations of 200,000.
  • The leisure & hospitality and health care sectors had the biggest gains, while the traditional retail and warehousing sectors lost jobs.
  • The unemployment rate remained at 3.7%, as the labor participation rate fell by 10 basis points to 62.1%—now slightly below its pre-pandemic February 2020 level.
  • Average hourly earnings rose 0.6% from October and 5.1% from a year ago.
  • Continued strength of the labor market and wage growth will keep the Federal Reserve on course to hike interest rates, with a 50-basis-point increase expected in December.
  • Despite a strong November jobs report, signs of economic weakness are beginning to show, such as a contraction in manufacturing activity last month. Higher interest rates will weigh more heavily on the job market and real estate markets throughout 2023.

Impacts on Commercial Real Estate


Office-using jobs increased by 20,000 in November, with professional & business services gaining 6,000 and financial activities 14,000. We expect that slower office-using job growth next year will weigh on demand for office space.


The warehousing & storage sector lost 12,500 jobs, while manufacturing added 14,000. Higher interest rates will gradually reduce consumer spending but we expect industrial & logistics demand will remain relatively resilient.


Traditional retail lost 29,900 jobs, while food services & drinking places added 62,100 as consumers continued to shift spending from goods to services. Nevertheless, the sector benefits from relatively strong fundamentals, as very little retail space has been added to the market in recent years.


The construction sector added 20,000 jobs in November. Specialty trade contractors gained 9,300 and construction of buildings added 5,600. Although the housing sector has slowed sharply, infrastructure spending will provide a cushion for construction in 2023.

Health Care

Health care gained 44,700 jobs in November. Ambulatory health care (outpatient services) added 23,300, while hospitals and nursing & residential care increased by 11,000 and 10,400, respectively. Demand for health-care properties should remain relatively resilient due to an aging population and a return to pre-pandemic patterns of health-care utilization.


Accommodation services added 15,900 jobs in November. Pent-up demand for travel should limit impacts of an economic slowdown on the sector.


We expect multifamily rents to fall as the labor market weakens and the economy slows. Multifamily demand will be aided by less single-family housing affordability, exacerbated by rising interest rates and limited supply.

The Bottom Line

The labor market has remained resilient despite aggressive monetary tightening by the Federal Reserve. November’s strong gain of 263,000 jobs was well above expectations. Annual wage growth of 5.1% was up from 4.7% in October. Continued strength of the labor market and high wage growth will keep the Fed on track to tighten monetary policy well into 2023. We expect a 50-basis-point increase of the federal funds rate in December and another increase in February.

It is important to recognize that jobs are a lagging indicator of economic growth and that there are current signs of economic weakness, including recently announced corporate layoffs and a decline in manufacturing activity in November. Growth in the Bureau of Labor Statistics’ establishment survey must be balanced against its household survey, which showed a loss of 138,000 jobs in November.

We expect that the labor market will soften in coming months as economic growth slows. Higher interest rates and economic uncertainty will weigh on commercial real estate investment and leasing activity next year until economic growth resumes.


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