Jobs are on the rise, but September growth was slow—a follow-up to a slow August. According to the latest report from the Labor Department, employers added 194,000 jobs for the month, and unemployment decreased by 0.4 percentage points to 4.8%.
Most job gains occurred in leisure and hospitality, professional and business services, retail trade, and transportation and warehousing.
Jobs in real estate and rental and leasing have increased by 6.9% YoY. While construction increased by 22,000 in September, it is still 201,000 below its February 2020 level.
What the industry is saying:
“The latest job additions of 194,000 in September are light considering there are still 5 million fewer Americans working now versus before the pandemic. There is some comfort in the 22,000 new jobs in the construction industry, though more jobs went to non-residential sectors rather than for homebuilding. Another 16,000 more workers were hired at building material and garden supply stores, which has consistently been one of the strongest sectors since the onset of the pandemic and clearly implies a greater focus toward home by consumers.
“One concern for interest rate-sensitive industries is inflation. The hourly wage rate rose 4.6%. This increase is higher than the usual 2% to 3% annual gains witnessed in the prior two decades before the pandemic but is needed to keep up with broader consumer price inflation (5.2%). Nonetheless, spiraling inflation of prices and wages could feed off each other, thereby forcing an increase in mortgage rates. The first-time homebuyer share has already sunk to a near two-year low of 29% and further affordability challenges loom ahead. Housing affordability looks to be available only in the outlying exurbs and smaller towns.” — Dr. Lawrence Yun, Chief Economist, National Association of REALTORS®
“Job growth remained lackluster in September following similarly disappointing gains in August. Although private sector job growth was at 317,000, and several categories showed gains—including professional services—there was a large drop in education employment. This was a byproduct of school hiring still being relatively weak compared to the typical seasonal patterns. The household survey showed a stronger, 526,000 increase in employment over the month, indicating that the payroll survey may not be capturing all the recent employment gains in the economy.
“The ongoing decline in the unemployment rate, and the rise in wage growth, is good news for the housing market, as it will continue to support strong housing demand. With 7.7 million people unemployed and looking for work, and a record 10.9 million job openings, we expect the unemployment rate will continue to drop over the next year. It was also positive to see the number of long-term unemployed fall by almost 500,000 last month.
“With respect to implications for the housing and mortgage markets, the drop in the unemployment rate below 5%, and the other indicators of job market strength, are likely to be sufficient for the Federal Reserve to move forward with tapering their asset purchases. This will likely lead to modest increases in interest rates, putting additional pressure on housing affordability at a time when home-price appreciation is still very high.” — Mike Fratantoni, SVP and Chief Economist, Mortgage Bankers Association