Stellar April Jobs Report Bodes Well For Housing Market

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The U.S. economy added about 263,000 in April and the unemployment rate dropped to 3.6%, driven mainly by job gains occurred in professional and business services, construction, health care and social assistance, according to the U.S. Bureau of Labor Statistics.

It was the lowest unemployment rate since December 1969.

The number of unemployed persons decreased by 387,000 to 5.8 million.

The labor force participation rate decreased by 0.2 percentage point to

62.8% in April, but was unchanged compared with April 2018.

The employment-population ratio was unchanged at 60.6%, which is about where it has been since October 2018. 

Average hourly earnings increased by six cents to $27.77 per hour.

Over the year, average hourly earnings have increased by 3.2%, according to the BLS’ estimates.

Average hourly earnings of private-sector production and nonsupervisory employees increased by seven cents to $23.31 per hour.

The increase in wage growth is particularly encouraging because rising household income is a major driver of home sales.

However, a notable trend revealed by the report is that the increase in jobs has not done much to draw U.S. teenagers into the workforce. The jobless rate for teenagers in April was 13.0% – basically unchanged from a year ago.

“Wage growth continued to grow [in April], but for wage growth to continue its upward trend, the prime-age labor force participation must continue to rise,” says Odeta Kushi, deputy chief economist for First American, in a statement. “While the prime-age labor force participation rate continues to be below the 2007 level and the long-run trend, there is room for further growth to normal levels of 83 percent which, according to our analysis, could push wage growth to as high as 3.8 percent.

“The prime-age labor force participation rate remains modestly below the longer run average of about 83 percent, implying there is continued opportunity to draw more workers off the sidelines,” Kushi adds. “This level of participation suggests continued strong wage growth in the months ahead. That’s good news for potential home-buyers this spring, who will benefit from increased purchasing power and the added confidence to buy.”

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