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DIGITAL Employment report August 2021

August 24, 2021 | 2 min read
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DIGITAL* employment chart

Scatter plot showing DIGITAL employment percentage changes over three and 12 month averages as of August 2021

Moody’s Analytics, Principal Real Estate Research, August 2021.

Employment rose in the second quarter of 2021 in 45 of the 48 metro areas Principal Real Estate Investors tracks, as regional labor markets continue to show signs of growth. Despite a recent rise in COVID-19 cases, the start of the summer saw strong hiring activity. Our internal DIGITAL sum of markets exceeded the national average during the past quarter due in part to a few larger metros, notably San Francisco and Los Angeles, hiring seasonal workers in the leisure and hospitality industry.

Overall, DIGITAL markets were close to the U.S. average this quarter with a few outliers. Markets with greater tourism saw renewed strength through June due to the seasonal boost in the leisure/hospitality industry. The manufacturing industry still lags broader employment as the effects of chip shortages linger. Service oriented industries which were shuttered during lockdowns are beginning to benefit from easing restrictions—though the Delta variant may pose downside risks as we enter the second half of the year. Some high-growth markets could also be experiencing constraints on construction activity amid heightened lumber prices and labor shortages.

Top 5, bottom 5 cities

Table showing the top and bottom 5 cities with extreme percentage changes in DIGITAL markets from May to July 2021

BLS, August 2021.

Despite resurgent growth, the labor market is still below its pre-pandemic peak. Meanwhile, job openings have risen to record levels as the current labor pool appears to exhibit mismatched skills and a shortage of lower-skilled lower-wage workers. Some workers may also feel unsafe or lack adequate childcare during the summer break. Slack in the labor market should tighten as students return to schools and supplemental unemployment insurance benefits roll off. The pace of vaccination has slowed considerably in the U.S., however. The emergence of the Delta variant alongside slowing vaccination could prove a headwind for markets should lockdowns reemerge. Even with new variants increasing transmission rates, we still expect most markets to fully recover by 2023, with DIGITAL markets seeing an earlier recovery.

Monthly percentage change

Collection of bar charts showing the monthly percentage change in DIGITAL markets segmented by gross-producing, service-providing, office-using and total, from February 2021 to July 2021

BLS, August 2021.

*DIGITAL refers to key long -term growth drivers centred around demographics, innovation, globalization, infrastructure, and technology that Principal has identified as metrics of long-term market outperformance.

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