New Yorkers’ restored enthusiasm is spilling out into the streets. Most of the revelers are undoubtedly celebrating our city’s Super Bowl victory. But a small minority—real estate investors among them—is also marking an inflection in the recovery.
Last Friday’s jobs report overshot expectations, propelling the Dow Jones Industrial Average to its highest level in almost four years. The Nasdaq managed one better, spiking to an 11-year high. Apart from equities, property investors are pointing to the new data as vindication of aggressive bidding strategies in Manhattan, Washington, D.C., and other cardinal markets. But have we reached a decisive point in the recovery? The evidence is hardly conclusive.
Friday’s employment report easily surpassed economists’ expectations for January. Apart from annual revisions and the anticipated drag from government payroll cuts, gains were broadly based. Hiring was slightly positive in nonresidential construction and some segments of manufacturing. Gains in service occupations were more pronounced, particularly in professional and business services, health care, and leisure and hospitality. Professional and business service gains were qualified, however.
Administrative services, including temporary help, accounted for just over half of January’s 70,000 new jobs in this category. A careful read of the data shows that improvements in permanent office-using employment continue to lag other areas. For New Yorkers wondering about the relevance of these national trends, the abysmal performance of financial services is a case in point; the sector shed 5,000 jobs in January and has been essentially flat over the past year.