Labor Department

WASHINGTON, DC-What is the commercial real estate industry to make of Friday’s disappointing unemployment figures? Briefly, the Labor Department reported that employers added 113,000 jobs to the nation’s payrolls in January, causing the unemployment rate to inch down to 6.6%. Indisputably, though, the numbers were anemic and worrisome—especially as they follow a lackluster report for December.

Just a straightforward reading of the numbers does not bode well for the office sector, Scott Homa, Jones Lang LaSalle’s research director, tells They don’t “provide much of a catalyst for future office demand,” he says.

“Specifically, the high concentration of jobs in non-office sectors, such as construction, manufacturing, leisure and hospitality, provides little benefit to the office market.”

Homa concludes with the dismal projection that the falling government payrolls and anemic growth in the professional and business services sector “effectively neutralizes prospects for near-term organic growth in national office demand.”

That said, there are pockets of growth, according to Chris Muoio, senior associate and economist with Research. He points to the shale oil boom and the construction sector as positive “with residential building construction and non-residential building construction showing strong gains over the last three months and year,” he says. “The housing recovery remains a positive for economic growth, despite the stall seen recently in home sales and prices.”

Muoio, though, doesn’t pull any punches about the near term prospects for growth, especially for the Washington DC area. The federal government, he says in his prepared statement, “is stuck in a mid-term election year with a rancorous Congress, minimizing any expectation of a turnaround in the immediate future.”

The bigger economic picture, however, seems to be more positive, at least from the perceptive of the Federal Reserve Bank. Few believe the Fed will back off from its schedule of tapering, which for all intents means it believes the economy is on track despite the disappointing job data.

“For the Fed, this report will confirm their current bias for reducing the pace of asset purchases, consistent with their expectations for the strong momentum in economic activity during the last six months of the year to be sustained in 2014,” Millan L. Mulraine, deputy head, U.S. research & strategy, TD Securities, says in a prepared statement. “And as the weather distortions in the data begin to dissipate, we expect the tone of economic data to improve.”