A record number of Americans are working, with another 253,000 net new job additions in April. Compared to the employment peak pre-pandemic, 3.2 million more people are working. The unemployment rate is super tight at 3.4%. Job openings are way above those searching for a job: 9.6 million job openings compared to 5.7 million people searching for one.
Let’s be mindful, however, that employment is considered a lagging indicator and the last economic data to turn. Job openings are 20% lower compared to one year ago. The tight job market is partly due to the nearly 5 million Americans who were in the labor force before the pandemic but are no longer seeking employment. The 3.2 million net job additions over the past three years are averaging 1 million job creations per year, which is only about half of the normal annual job creation.
Directionally, more jobs mean more housing demand. Given the many ‘help wanted’ signs, more jobs will be added in the upcoming months. Should more Americans enter the labor force, an even better outcome can be achieved as more supply will lessen inflationary pressure and lower the mortgage rate.