As regular readers will no doubt recall, I have frequently stressed in the past the importance that changes in employment rates have for the real estate markets. There is a separate statistic that partners with jobs, and is equally important. This is the rate of wage growth. If jobs grow, it is, of course, a good thing. However, if wage growth doesn’t follow, then the rates of employment will be a hollow bit of information.
Today’s U.S. employment report offered another solid month of job gains, with 228,000
positions added and the unemployment rate holding steady at 4.1 percent. November
was the 86th consecutive month of job growth, and the gains were above experts’
expectations. There have been 2.07 million jobs created over the last year.
• Continued solid gains in employment coupled with steady consumer spending and
improved business investment suggest economic growth of around 3 percent. These
positive indicators will probably nudge the Federal Open Market Committee to
increase interest rates later this month and again in the first quarter of 2018.
• A wide range of industries added jobs, with the professional and business services
sector — which generally pays higher wages — manufacturing, and health care leading
the gains.
• The information sector continued shedding jobs, a trend that started about a year ago.
That industry mostly includes jobs in publishing, broadcasting, telecommunications,
motion pictures, and sound recording.
• While solid job gains continue to confirm the labor market’s strength, experts are
increasingly focused on the lack of wage growth, which was anticipated to be higher at
this point in the employment cycle. November hourly earnings increased, but the gains
were below expectations. However, the average hours worked per week increased again,
which is helping overall worker pay. Note that the lower-than-expected wage growth
is outpacing inflation growth, suggesting that real earnings are positive. Generally,
economists do anticipate acceleration of wage growth over the next year. Sluggish wage
growth has been a concern among economists, though many believe that slow inflation
and weak productivity are to blame, for which there are no clear explanations
• Looking forward, the Job Openings and Labor Turnover Summary report from the U.S.
Bureau of Labor Statistics shows that the number of job openings has remained near
record-high levels since June of this year, at 6.1 million. Again, with most openings in
the professional and business services sector, that number suggests that there are
more jobs than qualified employees.
• Tech jobs increased by 8,100 positions in November, according to CompTIA — mostly
in computer, electronics, and semiconductor manufacturing. This aligns with continued
gains seen in total manufacturing job numbers. The IT and software services and
computer-system design industries also saw solid gains. However, IT jobs added, which
illustrates demand for such talent by businesses across all sectors of the economy,
jumped by 243,000 in November, the largest increase since 2015. New job postings
for IT occupations remained flat in November, at about 180,000 positions across the
nation. That is about 30,000 more jobs than at the same time last year but down from
more than 250,000 in January 2016. Still, while lower than two years ago, the trend has
not shown consistent declines but has averaged 200,000 positions over the last year.
• Lastly, the Federal Reserve released its latest flow of funds report this week, which
showed household and nonprofit net worth increasing to $96.9 trillion during the
third quarter of 2017, with the value of household real estate climbing to $24.2 trillion.
The value of household real estate is now above the bubble peak in early 2006 — not
adjusted for inflation and including new construction.
Curious about other factors affecting you in the real estate market? Regardless whether you’re a Buyer or Seller, you may be affected. GIve us a call and let us help. You known the numbers: Peter: (415) 279-6466; Jane: (415) 531-4091. We’d be pleased to assist.