January Employment Data

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses employment data for January.

• Broadly speaking, the improvement is good news, but the continuing high unemployment rate and a large number of people not in the labor force still imply a need for much faster gains.
• The net payroll job additions of 157,000 in January bring the 12-month total to a cool 2 million.  Essentially, this means 5 million net new jobs in the past 3 years.  Still, we need to be cognizant of the 8 million net job losses during the Great Recession.  Therefore, the recovery so far has been 70% of the prior job numbers peak.
• The housing market recovery is playing a key role in job creation in the construction sector, which added 28,000 jobs in January and nearly 100,000 in the past four months.  Jobs at furniture stores and at building/garden supply stores are also slowly coming around.
• Even though the jobs are being added, the population growth and the constant increase in new college graduates have also increased.  Furthermore, the number of non-working but not classified as unemployed has been rising as some took an early retirement package, went to graduate school, and most disturbingly a sudden sharp rise in the number of people receiving disability benefits.
• For reasons above, the official unemployment rate has been falling from 10 percent to the current 8 percent.  However, the employment rate (the number of people with jobs in relation to total adult population) has not improved at all after the deep plunge.
• The average hourly earnings rose to $23.78, which is a gain of 2.1 percent from one year ago.  The wage gain is roughly in line with consumer price inflation.
• For real estate, what matters is the number of jobs and not the unemployment or the employment rate.  The addition of 2 million jobs in the past year provides support for further rises in home sales and increased occupancy for commercial real estate.