The global economy accelerated in the final quarter of 2016 due to a combination of improved conditions in emerging market countries and stronger growth in developed economies. It expanded 2.7% year-on-year in Q4, above the 2.5% rise in Q3 and the strongest print in the full year. Q4’s strong reading brought total growth for 2016 to 2.6%, a notch above the 2.5% previously forecast but well below 2015’s 3.0%. The biggest risk to the global outlook is a rise in protectionism, which could put an end to the era of multinational trade agreements that has defined global economics in recent decades.
In the United States, GDP expanded at a seasonally-adjusted annualized rate of 1.9% in the fourth quarter, which, despite decelerating notably from the 3.2% reading observed in the previous quarter, still contributed to a solid performance of the economy in the second half of the year. Household spending was once again the main engine of growth on the back of accelerating wage growth, near full employment and multi-year-high consumer confidence.
The economy continues to hum along at a respectable pace. Homebuilding and manufacturing are both retaining upward momentum in early 2017, signs of overheating in the U.S. labor market are still weak and investment should pick up pace once policy uncertainty dissipates and investors capitalize on higher oil prices.
In the US, the unemployment rate, at 4.7 percent, and the number of unemployed persons, at 7.5 million, changed little in December. However, both measures edged down in the fourth quarter, after showing little net change earlier in the year. Total nonfarm payroll employment rose by 156,000 in December, with an increase in health care and social assistance. Job growth totaled 2.2 million in 2016, less than the increase of 2.7 million in 2015.
The unemployment rate in Canada increased to 6.9 percent in December from 6.8 percent in the previous month, in line with market expectations as more people participated in the labour market. Employment rose by 54,000 (+0.3 percent) in December, the result of gains in full-time work.
US Office Market Overview
Vacancy has decreased to 9.7%, down from Q3, and net absorption totaled a positive 24,653,312 sf. Vacant sublease space increased in Q4 to 46,520,461 sf. Rental rates ended the quarter at $24.30, an increase over the previous quarter. A total of 358 buildings were delivered to the market, bringing 18,486,841 sf of new space. There is 152,328,335 sf of additional space currently under construction.
US Industrial Market Overview
Industrial vacancy fell to 5.4% in Q4, with net absorption totaling positive 80,048,240 sf. Vacant sublease space decreased, ending the quarter to 41,392,976 sf. Due to decreased vacancy and increased demand, rental rates rose to $6.05. In Q4, a total of 473 buildings were delivered, adding 60,531,171 sf of space. There is 256,407,283 sf of industrial space currently under construction.