In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest monthly employment report.
- While payrolls grew in May, the growth was moderate – not anything to be overly exuberant about. Private payrolls rose by 178,000 and total payrolls were up by 175,000 due to a 3,000 job decline in the government workforce, predominantly at the Federal Government level. This is roughly in line with the average growth of 180,000 jobs over the last 3 years.
- After stronger growth earlier in the year, jobs in goods-producing industries have softened. Jobs in service providing industries have increased, but not enough to completely offset the slow down in employment in goods-producing industries.
- At 135.6 million, overall payrolls remain noticeably below the 138 million jobs seen at the peak in January 2008. At this month’s rate of progress, we are only 13 months away from a return to that previous peak. Of course, to see the same unemployment rate we will need to add more jobs because the labor force has grown by 1.7 million since January 2008.
- While the unemployment rate ticked up to 7.6 percent from 7.5 percent, the change is not statistically significant, and a closer look at the data shows that trends are mixed. In the right direction, the number of employed persons grew, the number of job losers and those completing temporary jobs shrank, while job leavers and reentrants to the labor force grew, and the total number of workers unemployed for more than 5 weeks shrank. But one might be concerned about the fact that the number employed part time for economic reasons fell only slightly, the number of workers unemployed for 27 weeks or more was roughly unchanged, and the unemployment rates for teenagers and African Americans both remain in the double-digits, 24.5 and 13.5 percent respectively, and both increased in May.
- Hours were unchanged in May and earnings rose 2 percent from a year ago.
- Mixed news in the labor market has a mixed implication for the housing market. Weaker employment data might cause the Fed to work to keep mortgage rates low for a longer period in the short-run, but mortgage rates are beginning to climb in anticipation of the Fed’s eventually tapering. Strong employment and income growth will eventually lead to more qualified buyers as household formation resumes a more normal trajectory of growth in the long-run.
