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 employment.
- Solid employment gains were seen in February with 246,000 net new private sector jobs. Construction job additions were 46,000. Real estate and leasing employment rose by 9,000.
- A sector that is not creating jobs is the government. State and local governments shed 10,000 jobs, mostly due to the need to balance the budget. Federal government jobs did not change in February but are expected to fall in the upcoming months due to sequester.
- From the low point 3 years ago, nearly 6 million net new jobs have been added. Keep in mind though, that 8 million jobs were cut during the Great Recession. Therefore, we have recovered only about 70 percent of those jobs that were lost. All the while, fresh high school and college graduates are streaming out and desperately seeking employment.
- The unemployment rate fell to 7.7 percent, but part of the decline was due to a smaller workforce. People have to be looking for job in order to be officially counted as being unemployed. Those who are going to graduate or technical schools because of a lack of employment are not counted as unemployed. Neither are those ‘discouraged’ in finding a job. Those on disability benefits, which have risen sharply in recent years, also do not get counted as unemployed.
- A measurement of employment rate – those with jobs among the adult population – shows only a bare improvement. The employment rate was bouncing around at 62 or 64 percent of all adults before steeply falling to 58 percent during the financial market crisis. Even today after 6 million job additions, only 59 percent are working, far below normal.
- The average hourly wage rose by a nickel in February, bringing the 12-month gain to a respectable 2.0 percent. Consumer price inflation has been roughly the same, so the wage gain is only helping to keep up with the cost of living expense. Interestingly though, the annualized wage gains have been 3 percent or higher for fourth consecutive months. High wages are good for workers, but that could also push up inflation rates down the line, which in turn will push up long-term interest rates including on mortgage loans.
- Overall, the job market is improving and possibly accelerating. More jobs mean more home sales (provided inventory slowly returns) and more leasing demand for commercial properties. The real estate market is in good position.