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Marcus & Millichap: Indicators Point to Fed Rate Increase This Month

Robust hiring in November may have cleared the last remaining obstacle to the Federal Reserve making a long-awaited increase in the overnight lending rate later this month.
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Robust hiring in November may have cleared the last remaining obstacle to the Federal Reserve making a long-awaited increase in the overnight lending rate later this month. So says a report from Marcus & Millichap. Researchers at the commercial real estate firm say payroll gains last month have kept the economy on track to add 2.5 million jobs in 2015.

Overall, employers added 211,000 jobs in November. Gains were spread across a number of industries, but especially strong in trade, transportation, and utilities; construction; education and health services; leisure and hospitality; and professional and business services. Industries that showed a slight downtick include information and natural resources and mining. Manufacturing remained somewhat flat.

The unemployment rate held firm at 5 percent; underemployment ticked up slightly to 9.9 percent, the second-lowest reading during the past seven years, Marcus & Millichap reports.

Wage growth stayed on its upward path, growing by 2.3 percent in November.

Employment growth in consumer-related industries mirrored improving property performance in the retail sector. According to the report, demand is outpacing construction nationally, creating a U.S. vacancy rate of 6.3 percent for the third quarter—the lowest level in nearly 10 years. Marcus & Millichap expects that rate to fall to 6.1 percent by the end of the year. (Locally, the firm says DFW’s retail sector is reporting its strongest occupancy rate in 15 years, prompting a new round of construction at levels not seen in more than a decade.)

With retailers looking to provide same-day delivery to consumers, the U.S. industrial sector also is strengthening. (This holds true in North Texas, a key e-commerce and distribution hub.)

Nationally, industrial vacancy is on track to also hit 6.1 percent, which Marcus & Millichap says could cause average national rents to jump by more than 5 percent.

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