If you follow the markets, you know that the first week of the new month is a big data drop for the previous month. Real estate and finance industry professionals, as well as consumers and concerned citizens in general, often look to the U.S. Bureau of Labor Statistics jobs report that is released each month as an established and reputable measure of future rates, current economic optimism and guidance in construction spending. The September jobs report proved challenging to interpret, as “the numbers were certainly blown around a lot by the storms,” said Carl Tannenbaum, chief economist for Northern Trust (New York Times). With the first monthly decline in employment in 7 years – 33,000 jobs were lost last month – but here is why you should NOT panic.
#1: Hurricane effects were HUGE. Texas, Florida and neighboring states saw immediate local disruptions to employment that paralleled the weather. Many large manufacturing plants plus small to mid-sized businesses of nearly every industry saw a hiring freeze, while many employed individuals were unable to work for half the month due to hurricane destruction. The Bureau of Labor Statistics reported that an ADDITIONAL 1.5 million people were out of work due to bad weather last month.
#2: There was GOOD news too. A drop in the jobless rate plus a year-over-year gain in wage growth were oft-overlooked positives in the September jobs report. Plus, several economists reminded us we are in the 9th year of economic expansion.
#3: The holidays are coming. E-commerce and shipping companies are known to hire, hire and hire some more as the holidays approach. The New York Times reports that “Radial, the second-largest direct-to-consumer e-commerce company behind Amazon, is hiring 27,000 people to work in its 25 warehouses around the country through mid-January.” Many employers are even increasing the hourly rate for workers during peak-holiday season or offering bonuses to retain current workers through this busy time.
Perhaps the biggest aha-moment from the jobs report comes from the instant reaction of Chief Economist Lawrence Yun, who defined what all of the weather challenges and data REALLY means for housing:
“The key statistic in the September jobs report is the fact that wages grew 2.9%. The tightening labor market, with unemployment at 4.2% and the number of job openings at high levels, assure more wage gains in the near future. Construction jobs, which did not change much in the latest month, will need to increase rapidly in order to relieve the housing shortage facing the country. But in the short term, there will be fewer construction workers building new homes, especially since some will be diverted to rebuilding areas impacted by the hurricanes. Unfortunately, housing shortages will last longer and home prices will no doubt continue to outpace wage growth for the foreseeable future.”
I hope that the data and details above puts your mind at ease when you read headlines or hear media coverage of such monthly news releases. Like all aspects of the economy, there will be high and low points – but it takes much more than one bad month of one employment measurement to change the trajectory of years and years worth of gains. In addition, we have not been building enough homes to meet demand for some time now, and the focus has shifted to re-building in many parts of the nation. Thus, the inventory issues that have plagued the market are more than likely here to stay. So if you look at what has actually changed in the last 30 days for most of us here… not much!
U.S. Lost 33,000 Jobs in September; Unemployment Rate Dips to 4.2%
Instant Reaction: September Jobs Report
All my best,
Bobbi Decker, SRES®, CIPS®
Broker Associate, Today Sotheby’s International Realty
Bobbi Decker & Associates
Bobbi Decker & Associates fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. For more information, please visit: http://portal.hud.gov/