NEW YORK CITY-Cushman & Wakefield‘s Chief Economist Ken McCarthy says the U.S. economy is on track for the best year of growth in the ongoing recovery.
In a blog post in response to U.S. employment numbers released on Friday by the U.S. Department of Labor’s Bureau of Labor Statistics, McCarthy says slower growth in December and January was due to severe weather and not “indicative of a slowdown in the general economy.”
The U.S. economy added 175,000 payroll jobs in February, the largest increase since November and above the consensus expectation of approximately 150,000. In the last 12 months, the economy has added 2.2 million jobs.
The services sector rebounded in February after suffering its worst month in four years in December. McCarthy pointed to two key services sectors for the commercial real estate industry that posted strong job growth in February—wholesale trade and office-using employment.
Wholesale trade employment rose by approximately 15,000 jobs in February and has risen by 116,000 jobs over the past year. “This industry is growing more rapidly than the U.S. as a whole, pointing to strong growth in the warehouse/distribution sector,” McCarthy says.
Office-using employment, which is the sum of employment in financial services, professional and business services and information increased by 72,000 jobs in February, the largest gain in seven months.
“Office-using employment has fully recovered from its recession losses and is at a new all-time high,” he says. “This suggests that demand for office space is healthy and rising. Office-using employment is growing at a healthy clip and industrial activity also remains strong, a conclusion that is reinforced by this morning’s report that U.S. imports and exports of goods both increased in January.”
McCarthy also believes that the economy’s strong growth prospects will mean that the Federal Reserve will not change its monetary policy direction.
“The economy is healthy enough that there is less need for the Fed to continue to purchase bonds in the volumes that they have been buying,” he predicts. “Thus, the tapering program that began late last year will continue. This will likely lead to higher interest rates, but the current pace of growth suggests that the economy can bear the higher cost of funds.”