Monthly jobs reports continue to offer a mixed picture of the economy. April's job gains were lower than expected, while unemployment fell due to 236,000 leaving the workforce. Wage growth continued to puzzle, slowing despite the shrinking labor pool. Although low jobs numbers and slower wage growth might suggest slowing economic growth, lower employment gains might indicate that the labor market is reaching its limit, making an acceleration in wages imminent. The underemployment rate will be a key metric in the coming months; the still-high rate is often seen as a sign that the labor market has yet to reach capacity, explaining why wages haven’t increased significantly.
Monthly job growth has averaged a relatively strong 202,000 for the past three months, but remains volatile, as do revisions. Average hourly earnings rose slightly in March. Wages have risen by 2.7% this year. In these results, there is no reason to think the Fed might change course in its normalization of monetary policy. Markets have already priced in two additional rate increases this year. The Fed could consider a third increase if wage growth remains above 2.5%, given uneven productivity growth.
Employment gains continued to surprise to the upside in February. Meanwhile, wage growth slowed slightly—after the strong January increase that led investors to believe higher wage growth might be imminent. February’s report may quell some of that concern. Hiring increases were broad-based and robust in the construction, retail trade, manufacturing, professional & business services, financial activities, health care and mining sectors.
The economy started off 2018 on a strong note, with employment gains surprising on the upside. Job growth has slowed in the past two years but remains solid. A tighter labor market may finally be translating into greater pay increases for workers—wages saw their largest increase since 2009 in January. Hiring was broad-based and robust in the construction, manufacturing, food services and health care sectors, with employment continuing to trend upward.
October saw 261,000 jobs added, and September's decline has been revised to an 18,000-job gain, re-establishing the longest streak of monthly job gains since the series was begun in 1939. Although October's gain came in below consensus, the solid growth and upward revisions show the hurricanes' impact on employment to have been less severe than was thought in September.
U.S. employment fell by 33,000 jobs in September—the first monthly loss since September 2010—ending the longest streak of monthly job gains on record. The loss was partially attributed to last month's two major hurricanes. With downward revisions to July and August, the rolling three-month average is now 91,000 jobs, down from 185,000 last month. On a positive note, wage growth improved significantly, unemployment fell from 4.4% to 4.2%, and the labor force participation rate rose from 62.9% to 63.1%.
At our conference this month in D.C., Ken Simonson of AGC and Jamie Woodwell from MBA shared their distinct perspectives on which policy issues were potentially most consequential for real estate. Tax reform and immigration were discussed in depth.
U.S. employers added 156,000 jobs in August, which was below the consensus forecast for 180,000. Over the past three months, job gains have averaged 185,000—10,000 fewer than last month’s rolling average. This is a healthy pace and the economy remains in good shape, but job growth is starting to slow slightly: 2017 has averaged 176,000 new jobs monthly, down from 2016's 187,000. Surprisingly, wage growth has not accelerated, despite the tight labor market. August's 2.5% wage growth maintained the pace we've seen for most of the past year.
U.S. employers added 209,000 jobs in July, which was above the consensus forecast of 180,000 jobs. Over the past three months, job gains have averaged 195,000. This is a healthy pace and the economy remains in good shape, but job growth may be slowing slightly: 2017 has averaged 184,000 new jobs monthly, down from 2016's 187,000. Surprisingly, wage growth has not accelerated, despite the tight labor market. July's 2.5% wage growth maintained the pace we've seen for most of the past year.
U.S. employers added 222,000 jobs in June, which was above the consensus forecast of 170,000 jobs. Monthly job gains have averaged 194,000 over the past three months. The current unemployment rate is low, but there is no clear trend in overall job generation. Certain sectors, such as health care, continue to see growth. Other sectors, such as construction, manufacturing and transportation, remain flat.
After a lull in March, employment growth rebounded in April. The rolling three-month average was virtually unchanged at 174,000 jobs per month and the average for the past 12 months is 186,000—so employers have not materially changed their hiring patterns. Notwithstanding the change in business and consumer sentiment since Donald Trump’s election, economic data in 2017 remain very similar to those at the end of the Obama administration.
Today's December employment report had a relatively low headline number, but also a lot of positive data behind it. Revisions to October and November jobs numbers showed a net gain of 19,000 jobs, though the three-month rolling average fell to 165,000, a drop of 11,000 from last month.