Housing industry experts explained that today’s jobs report, while stronger than expected, had its downside.
One economist pointed out that while the increase is positive, the slow-down in wage growth suggests room for more tightening within the labor market.
“The initial release of jobs data for 2017 showed mixed results,” said Curt Long, National Association of Federally-Insured Credit Unions chief economist. “The headline figure for job growth impressed at 227,000 and labor force participation improved, as well.”
“But wage growth declined to just 2.5% despite the increase in minimum wage laws in January across numerous states,” Long said. “The lack of wage growth suggests further room for tightening in the labor market. So long as that remains true, and with inflation still below target, the Fed will be content to hold off on further interest rate hikes.”
And Long isn’t the only one who thinks the Federal Reserve will wait on raising interest rates this year.
“The 227,000 rise in non-farm payrolls in January suggests that the labor market started the year on a reasonably solid footing,” Capital Economics Economist Andrew Hunter said. “However, the drop back in annual wage growth is another reason to think the Fed will hold off raising interest rates until June.”
In fact, Jason Obradovich, New American Funding executive vice president of capital markets, previously explained in an interview with HousingWire that for all its intentions, the Fed probably won’t be raising rates as much as it would like in 2017.
One economist explains that in order for the housing market to reach its full potential, more aggressive policies are needed.
“There hasn’t been much policy talk on how to boost the housing market, which has performed short of its potential throughout the recovery,” Redfin Chief Economist Nela Richardson said. “An aggressive housing policy could reignite the feedback loop between jobs, wages and the housing sector that has been sorely missed in the present economy.”
One expert that doesn’t agree: Zillow Chief Economist Svenja Gudell. In fact, Gudell talks about the strong wage growth in January’s report.
“The January jobs report is undoubtedly a strong one, showing strong wage growth and broad-based gains across a number of important sectors, including construction, health care and financial and technical services,” Gudell said. “Widespread gains in construction bode well for the housing industry in advance of the busy home-shopping season to come, though growth in construction employment continues to be driven more by the multifamily and remodeling segments rather than single-family homes.”
However even Gudell saw room for improvement going forward.
“But despite the general strength of the jobs market in January, a peek beneath some of the headline numbers reveals some areas for improvement,” she said. “While overall retail employment was up, employment at department stores, in particular — a key sub-sector — was down year-over-year and looks likely to continue falling as major chains like Macys and Wal-Mart shutter stores and shed workers.”
“The clerks and cashiers likely to be impacted by these closures make up a large share of all retail employees, and tens of thousands of them are the primary breadwinners in their households, so it will be critical to ensure these workers can find positions elsewhere as the economy keeps chugging along,” she concluded.
Meanwhile, on Twitter, the battle wages between giving the credit for the strong number of jobs added to the outgoing administration, or the incoming.
While others thank President Donald Trump.
Way to go President Trump! Winning feels so good and it gets better every single day! 700,000 more new jobs are coming. ���� #JobsReport— WHITE GIRL (@CLK54321) February 3, 2017
As it turns out, Fannie Mae gives more credit to the new administration for the significant increase in new jobs.
“Today’s jobs report was largely positive, showing a pickup in hiring and in the labor force participation rate,” Fannie Mae Chief Economist Doug Duncan said. “We view the strength in hiring as consistent with increased optimism from the private sector following the presidential election, with businesses saying they expected to expand and plan to hire more workers.”