Real estate, mortgage industry reaction to US jobs report

by Steve Randall10 Jun 2019

The latest US jobs report was released Friday and the gain of 75,000 has led to concern about the economy with commentators asking if this signals a slowdown.

So what do some of the leading economists in the mortgage and real estate sectors make of the latest stats?

Doug Duncan, chief economist at Fannie Mae says that the figures are consistent with an economy that is continuing to slow from expansion highs, with employers likely to be holding back due to uncertainty.

And as the previous two monthly reports have been revised down by 75,000, there was a net gain of zero.

“On the other hand, the three-month moving average of payroll growth remains solid at 151,000, and wages continued to grow at a strong pace of 3.1% year-over-year,” Duncan added. “There was also good news in the household survey. The unemployment rate held steady at its historically low level, and the labor force participation rate was unchanged after dropping four-tenths in the last two months.”

He added that construction jobs grew by 5,200 in May, which should help with supply issues in the housing market.

No rate cut for now

LendingTree chief economist Tendayi Kapfidze, also noted that the weaker May reading is a sign of a slowing economy but added that the labor market remains one of the strongest components of the economy.

He told MPA that although the futures markets are calling for  Fed rate cut – and the lack of inflation from the labor market would support that if some other economic factors warranted it – he does not see a cut in the near term.

“It’s likely still too early for the Fed to cut, the three-month average of job growth is still a respectable 151,000 and the Fed will likely need to see further evidence before concluding that rate cuts are required,” said Kapfidze.

Meanwhile, NerdWallet’s home expert believes the weaker job’s data could lead to lower rates.

“Mortgage rates have fallen a lot in the last few months, but today's weaker-than-expected jobs numbers could soon push rates down even more,” he said. “Home sales saw an unexpected slump in the spring, and feeble job creation could carry that slump through the summer homebuying season. We are still in the midst of a seller's housing market, but data like this indicates we are moving closer to a more balanced market.”

Hidden potential

Looking at the labor force participation rate, there was a one tenth of one percent reduction to 82.1 but First American chief economist Mark Fleming says this is because of demographic trends rather than economic ones.

“Baby Boomers are retiring out of the workforce, and there is a large cohort of Millennials who are coming into prime working age (25-34),” he said. “However, because many of them are still working through college and grad school, the prime age labor force participation rate does not yet reflect their potential.”


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