"These data indicate an economy that is still growing, but perhaps at an inflection point"
Employment conditions are looking positive despite economic headwinds as US companies added 315,000 jobs in August.
Total nonfarm payroll employment rose by 315,000 last month, with job growth holding steady across most sectors, according to the Bureau of Labor Statistics. However, the unemployment rate inched up by 0.2% to 3.7%.
“The August jobs report revealed that while the labor market remains quite strong, with employment growth still above a sustainable pace; however, that pace is slowing,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “Wage growth is still strong, with average hourly earnings up 5.2% compared to a year ago.
“The increase in the unemployment rate largely reflects more workers entering the workforce. The labor force participation rate remains 1% below pre-pandemic levels, but the increase is positive, as labor supply constraints have impacted several segments of the economy.”
There were notable job gains in the professional and business service sectors (+68,000), health care (+48,000), and retail trade (+44,000).
“Coupled with other recent readings, these data indicate an economy that is still growing, but perhaps at an inflection point,” Fratantoni said. “With this in mind, we expect that the Federal Reserve will stay the course with further rate hikes at upcoming meetings.
“The housing market is reeling from the hit to affordability from the spike in mortgage rates and much higher home prices. While these data don’t promise any near-term relief on rates, the strong job market will continue to support housing demand as household incomes continue to grow at a brisk pace.”
Meanwhile, Fannie Mae foresaw a housing market tumbling down to a “modest recession.”
“The housing market continues to slow rapidly, as nominal single-family construction spending hit its lowest level since March,” said Ricky Goyette, associate at Fannie Mae’s Economic and Strategic Research Group. “In real terms, spending was likely even lower as housing demand, especially for new homes, has fallen rapidly. This is consistent with our view that declines in residential fixed investment, which historically lead to broader economic downturns, likely portend a recession.
“We currently forecast a modest recession to occur in early 2023. Further, we expect continued home price growth deceleration over the coming quarters.”