Let’s take a look at this week’s economic news, which continues to reflect slow national growth, a slowing that Seattle’s tech growth continues to defy.
The report on 3rd quarter GDP was as expected: Up just 1.9 percent. But up.
The U.S. economy slowed to a modest growth rate of 1.9% in the summer as consumer spending downshifted and businesses continued to trim their investments in response to trade war uncertainty and a weakening global economy.
The Commerce Department reported Wednesday that the July-September performance for the gross domestic product, the economy’s total output of goods and services, was just below the 2% rate of growth in the second quarter .
The payroll process firm ADP reports private sector employers added 125,000 workers last month.
U.S. businesses added a mere 125,000 jobs in October, a slowdown in hiring driven in part by job cuts in manufacturing and construction.
Payroll processor ADP said Wednesday that hiring in September was also revised down sharply to 93,000 jobs from the initial report of 135,000 jobs. The October figure did not account for the strike by General Motors’ workers , which likely led to the loss of an additional 60,000 jobs, said Mark Zandi, chief economist at Moody’s Analytics.
“It’s clear that job growth continues to slow,” said Zandi, who added that it would be critical as to whether hiring stays above 100,000 a month and matches population growth or slips below that level in what would be a troubling sign for the economy.
A bit of good national news in wage growth.
Annual wages and benefits for U.S. workers continued to rise at a modest pace in the third quarter, even as unemployment stays near a half-century low.
The Labor Department says that growth in pay and benefits for all U.S. workers rose 2.8% in the July-September quarter, compared to the same period in 2018. That’s at a slightly quicker pace than the second quarter’s 2.7% growth.
And with the wage growth, a bit of good news on increased consumer spending.
The Commerce Department says consumer spending rose 0.2% last month, matching August’s increase. Incomes grew 0.3% lifting the U.S. savings rate to 8.3% in September, highest since March.
NFIB reports, again, that small businesses continue to have problems finding qualified workers.
Small businesses across the country are feeling the continued effects of the worker shortage, as it remained their top problem in October. Owners added an average addition of 0.12 workers per firm, generally unchanged from September, according to NFIB’s monthly jobs report. Although job creation has remained steady, net creation has faded since February.
James Hamilton provides good perspective on this in Econbrowser.
While the national economy seems to be inching along like a tortoise, Seattle’s tech economy races ahead like a hare. (We know, the metaphor is double-edged.)
CBRE’s annual Tech-30 report, which measures the tech industry’s impact on North American office real estate markets, shows Seattle is the sixth fastest growing tech market in overall office rent growth. Rents jumped 12.4 percent between Q2 2017 and Q2 2019, up from 11.7 percent in the previous two-year period, CBRE reported.
Seattle is also fourth in tech employment growth, with a rate of 23.7 percent during 2017 and 2018. The 34,000 new jobs added in the market were the highest number among any of the Tech-30 cities.
Vancouver, B.C., San Francisco and Toronto were the top three markets ahead of Seattle in the overall ranking of the 30 markets.
Geek Wire reporter Kurt Schlosser adds,
CBRE’s report comes on the heels of last week’s Q3 2019 PayScale Index, which tracks quarterly and annual trends in compensation, and found that wages increased 4 percent year over year in Seattle. The city outpaced the national average of 2.6 percent and only trailed San Francisco, at 4.3 percent.
As we know, the metro Seattle tech sector has been a key economic driver for the state. The sustained strong growth is good for the state and a major contributor to the run of good revenue reports we’ve see. As we’ve seen in the past, though, this strength can serve to overshadow the less-than-robust growth experienced in other sectors and other regions of the state.
Something to watch.