Rent and Operating Trends – Week of February 5th 2023

The U.S. employment market continues its impressive growth, as the January jobs report blew away expectations. More than 500,000 new jobs were created in January, and not only is the sheer volume significant, but the diversity of new jobs across employment sectors is equally important. Leisure and hospitality led all sectors with 128,000 new jobs added, but professional and business services, government and healthcare also posted strong months, as each sector grew by at least 50,000 new positions. The unemployment rate fell to 3.4%, its lowest level since 1969. Wages also grew, although the pace of wage gains continues to soften, which many economists view as a positive indicator as overall inflation recedes from last June’s peak. Wages are up 4.4% on a year over year basis. By all accounts the employment market remains extremely tight despite headline grabbing layoffs from major tech and financial institutions.

Corporate earnings have been mixed recently as many large companies recently released their Q4 earnings. While the employment market remains strong there continues to be skepticism about overall economic growth, especially around the globe. Equity markets remain volatile, while bond yields have increased over the past week as investors continue to show concern for the macro-economic outlook.

Positive indicators continue to arise across the multifamily sector as the prime leasing season approaches. Occupancy nationwide increased last week for the first time in months, and traffic, new leases signed, and net effective rent all grew as well. All signs are pointing to a strong and normal leasing season in 2023 as leading indicators have performed well thus far this year.