By: Head of Data Strategy at LightBox, Manus Clancy
The Labor Market’s Balancing Act
The March 2025 labor reports dropped last week and… it’s a tale of two tapes. On one side, job growth is punching above its weight class. On the other, we are starting to see the subtle creaks of employer caution seep into the cracks. If you’re watching the labor market to read the tea leaves for CRE, consumer demand, or interest rate pressure, you’ll want to sit down for this one.
Let’s start with the headline: 228,000 jobs added in March, according to the BLS. That’s a solid beat over the consensus estimate of 140,000. A month ago, you couldn’t find five economists willing to bet on that kind of strength. But here we are. Leisure and hospitality continued to rebound, health care posted gains, and even manufacturing held its ground. That’s the good news.
But don’t get too cozy just yet.
The unemployment rate ticked up to 4.2%, and no, that’s not a rounding error. It’s partly because more folks are entering the labor force—but it’s also a reminder that the market is still recalibrating. Average hourly earnings rose 0.3%, which is just enough to keep the Fed squinting at wage inflation.
Now, when you zoom out, things start to look a bit more nuanced. Earlier in the week, ADP’s private payroll report showed a 155,000-job gain, up from a downwardly revised 84,000 in February. Professional and business services led the charge, with manufacturing surprisingly adding 21,000 jobs. It’s a sturdy number but not bulletproof.
Then came Tuesday’s JOLTS report—the undercard fight everyone watches but no one bets on. Job openings fell to 7.57 million, the lowest we’ve seen since September. Translation? Employers are hiring, but they’re posting fewer new positions. It’s not a full-blown retreat, but it is a cautious step back from the hiring binge we saw in 2022 and 2023.
Of course, these data points are being treated as a parenthetical in the post–April 2nd world—after the Trump administration’s sweeping tariff announcements. The sheer size and breadth of the Trump tariffs announced that day took everyone by surprise and sent stock prices worldwide plummeting.
The sell off sent stocks down by 10% over two days while also pushing bond yields lower as investors raced out of equities and into U.S. Treasuries.
It begs the question: what will April bring us?
Certainly, for those the depend on imported goods, the ramifications could come quickly. Manufacturers that assemble parts in the U.S. along with retailers that sell imported consumer goods or apparel may have no choice but to react quickly with price increases, layoffs, furloughs, and store closings.
Anecdotally, we’re hearing that small-to-midsize logistics firms are preparing for softening demand in Q2—always a canary in the economic coal mine.
You also can’t ignore the federal hiring freeze that kicked in last month. It’s still early, but it’s already trimming some public-sector job growth at the margins—just enough to be noticeable in regions where government employment props up local economies.
What does this all mean for CRE?
I’ve noted on LinkedIn and X that existing CRE (as opposed to new development) is not as exposed to higher-priced, tariff-impacted supply costs. This may make the asset class a safe harbor compared to other, more-exposed asset classes.
But that really varies asset class by asset class.
For existing, stabilized multifamily, industrial, self-storage, senior living, student housing, and assisted living, the exposure to imported goods is limited to appliance and physical plant maintenance. Those property segments could outperform the broader markets.
Hotel and retail could be more heavily hit if international travel stops, the tariffs trigger a pull back in spending, or if the tariffs linger and trigger a recession.
Of course, all bets are off if the economy slides into a deep recession or if lenders get so skittish that capital becomes constrained.
If you’re in commercial real estate, the data cocktail suggests a slower pace ahead—not a freeze, but certainly not a sprint. Expect longer leasing cycles, a more selective tenant pool, and continued softness in hiring-heavy metros.
For the Fed? This is where it gets tricky. They’re juggling good jobs data against sticky inflation, a volatile geopolitical backdrop, and mixed signals from the consumer side. I wouldn’t bet on a rate cut before June, and even then, it’ll come with a lot of throat clearing.
Bottom line: March was a good month for jobs, but the clouds on the horizon have gotten considerably darker.
Stay tuned—this next quarter’s going to be a ride.
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