BY LAWRENCE YUN, SENIOR VICE PRESIDENT AND CHIEF ECONOMIST & GEORGE RATIU, NAR
DIRECTOR, QUANTITATIVE & COMMERCIAL RESEARCH, NATIONAL ASSOCIATION OF REALTORS®
OFFICE SECTOR GAINS DRIVE SIOR
COMMERCIAL MARKETS IN THIRD
The economy lost momentum in the third quarter of this year.
Based on the first estimate from the Bureau of Economic Analysis, real gross domestic product (GDP) rose at an annual rate
of 1. 5 percent. In comparison, second quarter growth clocked
at 3. 9 percent, while the third quarter 2014 rate of growth was
4. 3 percent.
Consumer spending continued its moderate growth path, rising at 3. 3 percent in the third quarter. With the third quarter
comprising the summer holiday season, spending on durable
goods increased at a positive 6. 7 percent, as consumers purchased automobiles, furniture, household appliances and recreational goods and vehicles. Nondurable good purchases also
advanced, driven by sales of clothing and shoes, as well as
gasoline. Consumer spending on services rose 2. 6 percent on
an annual basis, with transportation, financial services, and
health care driving growth.
While business investments remained positive, with a 2. 1 percent annual rate of growth in the third quarter, the change in
private inventories was a significant negative contributor to
the GDP. The figure signaled a throttling back of production
likely spurred by a downward change in business outlook.
Business investments in equipment rose at 5. 3 percent, lifted
by double-digit increases in information processing and transportation equipment. Spending on commercial real estate declined 4.0 percent on an annual basis, while private residential
fixed investment—home building—rose at an annual rate of
6. 1 percent.
International trade took a milder pace in the third quarter,
as slower growth in the Chinese economy and higher global
economic volatility coupled with a stronger dollar impacted
exporters. Real net exports totaled a negative $536.2 billion
during the quarter, virtually unchanged from the prior quarter.
Government spending also moderated, as defense spending
cuts continued. Spending at the federal level rose at an annual
rate of 0.25 percent, held back by 1. 4 percent drop in defense
expenditures. State and local government spending advanced
at a 2. 6 percent annual rate.
The number of new jobs increased in the third quarter of 2015,
but at a slightly slower pace compared with the same period in
2014. During the quarter, 501,000 new employees were added
to payrolls nationwide, bringing the total for the January to
September period to 1. 8 million. Average weekly earnings of
private employees—adjusted for inflation—rose by 2. 3 percent in the third quarter of this year.
Employment in private service-providing industries provided
the main thrust for new job growth during the third quarter of
the year. Employment in education and health rose by 118,000
jobs, the largest industry gain during the quarter. With the
height of summer travel, leisure and hospitality added 99,000
net new positions, while professional and business services
accounted for an additional 98,000 new employees. Financial
services and information industries added 27,000 and 11,000
new positions to payrolls during the period, keeping demand
for office space positive. With demand for industrial properties rising, transportation and warehousing employment gained
23,700 new positions, while wholesale trade employment rose
by 4,000 jobs.
The unemployment rate declined from an average 5. 4 percent
in the second quarter 2015 to 5. 1 percent by the close of the
third quarter. At the end of September there were 7. 9 million
unemployed Americans. The average duration of unemployment declined from 32 weeks in the first quarter to 26 weeks
by the end of September 2015.