Marcus & Millichap: fewer than 50,000 new jobs a month can hold unemployment steady

Marcus & Millichap now puts the break-even job growth rate for a stable unemployment rate below 50,000 jobs a month, down from about 100,000. The brokerage attributes the change to demographics, rising worker productivity and reduced immigration, according to a report it published and Connect CRE covered.

Recent hiring data are thin: the economy added 29,000 jobs in September, and downward revisions erased another 60,000 from July and August. Year-to-date gains total 612,000, with Moody's forecasting 735,000 for all of 2026 and 645,000 for 2027. Unemployment has held in the low-4% range anyway. Marcus & Millichap credits that to retirements and slower net immigration constraining labor force growth. Economist Gad Levanon puts real productivity in professional and business services 16% above its 2019 level.

Slower employment growth means less household formation, weaker apartment absorption and less work-related migration, especially in Sun Belt markets still working through excess supply. Consumer sales rose 6% year over year through August, about 2.5% after inflation. Retail net absorption has averaged under 2 million square feet a quarter since the start of 2025, against more than 6 million a quarter in 2024 and 12 million in 2019.

Office-using employment has fallen by nearly 325,000 positions over the past two years, yet the sector has returned to positive absorption as return-to-office demand supports leasing. Marcus & Millichap says e-commerce growth and tariff-driven inventory adjustments continue to shape industrial space requirements; this publication covered the same cost pressure on industrial CRE this month.

The brokerage's read on capital markets is defensive. It says revenue growth will depend more on operational efficiency, scale, value creation and expense control as job creation provides less lift to absorption. Reduced construction and eventual payroll growth could support property performance for investors positioned for the shift, it adds.