ADP Employment, Mortgage Purchase Applications

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses ADP employment figures and mortgage purchase applications.

• Solid job gains, according to ADP, a company that processes payroll checks for many private sector companies. A net 216,000 private sector jobs were added in February.
• ADP does not measure government sector jobs, which have been declining by about 20,000 each month as state and local governments are trying to balance the budget. So the official job figures from the Bureau of Labor Statistics this Friday will likely show about 195,000 in net new job creation. Depending upon whether labor force participation recovers, the unemployment may not necessarily fall even with job gains.
• Remember, in the past 3 years, many people enrolled in schools, took early retirement packages, or simply dropped out of the labor force because of job search frustration. A re-entry of these people into the job market can keep the unemployment rate elevated. But for home buying and commercial real estate occupancy, it is all about job creation, and more demand is being added with each passing month.
• Separately, productivity rose 0.9 percent in the fourth quarter of last year. It simply means we are able to pump out 0.9 percent more products and services because of improvements in technology. The rise in productivity is the source of long run prosperity. America has become the economic superpower, surpassing Britain about 100 years ago because of faster productivity growth in the U.S. Looking over the shoulder, however, productivity growth in China is notably higher than in the U.S.
• Finally in today's economic data, mortgage applications for a home purchase rose 2 percent in the past week. Even with this increase, there has not been any notable pick up in this data, and it has not corresponded in an upturn in home sales. Application data misses out on all-cash deals and the data is only about applications and not approvals.