Broadly speaking, the jobs report overall topped expectations, proving strong for the economy but weak for housing.
Total payroll jobs in October increased 204,000, following a revised increase of 163,000 for September and after a revised gain of 238,000 for August.
Many housing analysts were surprised by the payroll increase given the government shutdown and debt ceiling standoff that occupied nearly half of the month. Recently the consumber confidence towards homebuying hit an all-time low.
However, the much bigger than expected gain, combined with a cumulative 60,000 upward revision to the gains in the two preceding months will definitely increase speculation that the Federal Reserve will begin tapering its asset purchases before the year is out, according to Capital Economics.
This increase in jobs gains, coupled with a stronger 2.8% gain in third-quarter Gross Domestic Product growth is enough fuel for the Fed to justify making its first deduction in December. But it’s still unclear whether it will begin tapering or not, explained Capital Economics chief U.S. economist Paul Ashworth.
“Given all the flip- flopping, it's hard to know exactly what evidence would satisfy the majority of Fed officials, he said.
The big issue for housing is residential construction employment grew slowly and remains far below the pre-bubble level.
“Construction continued to add jobs though at a slower pace than in September and construction wages were flat,” explained Fannie Mae chief economist Doug Duncan. “Thus, while the growth path for housing supply is on a firm footing, it is not yet robust.”
Residential construction employment, including residential specialty trade contractors, increased by 4.8 thousand on October versus one month earlier, and 14.2 thousand compared to three months earlier.
The three-month change in residential construction jobs in October was the smallest increase in the past twelve months.
"Taking the longer view, residential construction employment remains low: 2.16 million in October 2013, slightly down from 2.60 million in January 2001," Trulia (TRLA) chief economist Jed Kolko.
Employment among 25 to 34 year-olds – the prime age group for housing demand – is still well below pre-bubble levels.
The share of young adults that still aren’t working dropped from 75% in September to 74.6% in October, but much or all of that drop may be due to the federal freeze, Trulia noted.
Nonetheless, the longer-term trend is discouraging.
For instance, the pre-shutdown employment rate of 75% in September was closer to the low point during the recession that to the pre-bubble normal of roughly 78% to 80%.
No new metro-level jobs data were released since the last jobs reports two weeks ago. Consequently, job growth in hardest-hit metropolitans was 1,6% year-over-year, a slight drop below the national job growth of 1.7% for the same period.