There's no silver lining to the disappointing jobs report for last month, according to Calvin Schnure, NAREIT vice president, research and industry information.
In a video interview with REIT.com, Schnure broke down the latest U.S. economic data and assessed the implications for the REIT market.
"This is a disappointing report," Schnure said. He pointed out while the unemployment rate has dropped, that reflects the growth in the number of people who have stopped looking for work and left the labor force.
Schnure said the news doesn't bode well for the majority of commercial real estate property sectors, either. For example, the unemployment rate for workers between the ages of 25 and 34 climbed for the fourth month in a row.
"This is actually a feature that we've seen in the economic recovery, where the people with less seniority, less job experience, less training have suffered more," Schnure said. "It's interesting that the unemployment rate for each age group over 35 has continued to improve."
The weaknesses in the employment trends for that segment of the population suggests that multifamily property owners won't be able to sustain the rent increases and pricing power that they have acquired during the sector's latest upswing.
The multifamily sector wasn't alone in suffering some setbacks in the month. He noted that office employment growth has slowed and isn't developing momentum, according to Schnure. That should have a negative effect on absorption in the office sector and hurt rent and leasing growth.
For the retail sector, signs in in the conditions reported by workers weren't encouraging, Schnure said. Average hourly earnings dipped, while there was weak growth in the number of hours worked. Those two factors help drive wages and spending, and hence retail sales, Schnure said.
"It's going to be difficult for consumers to maintain their rate of retail spending if we don't have more wage and salary growth," Schnure said.
One anomaly could be the health care sector, according to Schnure.
"There's seems to be more momentum in that sector," Schnure said. "There are fundamental forces that are driving health care. That sector is a little bit immune to the slowdown in the rest of the economy, but it's not going to be enough to carry the economy going forward."