March’s employment report came in well below expectations with its increase of just 98,000 jobs, however experts say the report isn’t all bad news.
“The soft hiring seen in March is not too concerning and likely a single month aberration,” said Lawrence Yun, the National Association of Realtors chief economist. “The recent high levels of voluntary quitting, presumably because of better job opportunities elsewhere, will lead to strengthening wage growth.”
What’s more, experts don’t think this dip will alter the strong spring home-buying season to come.
“Housing demand still looks solid going forward,” Yun said. “Housing supply, on the other hand, could be constrained further because homebuilders still face worker shortages despite construction employment gains holding steady in recent months.”
Many economists blamed the Winter Storm Stella for the sudden drop, but say jobs will increase again in April.
“The March employment report disappointed with the fewest jobs added since May of last year, but there are some caveats,” said Curt Long, the National Association of Federally-Insured Credit Unions chief economist. “Weak readings in the construction and retail sectors likely owed something to Winter Storm Stella.”
“Additionally, there was a larger than normal discrepancy between the modest gains in the payroll survey and those of the household survey and ADP estimate, which were far stronger,” Long said. “It would not be a surprise to see a strong bounce back in April, as well as upward revisions to the March figure.”
One expert explains this drop is the first time job growth dipped below 100,000 since last year, but also mentioned the winter storm as a possible cause.
“On the disappointing side, the establishment survey showed headline job gains falling below 100,000 for the first time since last May on the heels of sizable downward revisions for the prior two months,” Fannie Mae Chief Economist Doug Duncan said.
“There was plenty of temptation to blame the stormy March weather that followed the unseasonably warm January and February,” Duncan said. “One supporting piece of evidence could be seen in construction payrolls, which moderated sharply after robust gains earlier in the year.”
Other economists agreed the drop was due to the winter storm, but said very little about the disappointing construction growth.
“Much of the slowdown in job growth can likely be attributed to temporary weather-related factors, with Winter Storm Stella likely playing a role in keeping hiring low just at the same time the monthly hiring survey was conducted,” Zillow Chief Economist Svenja Gudell said. “Construction hiring grew modestly, continuing a string of recent gains, though was down substantially from much larger gains earlier in the year.”
“Still, housing starts and permits have increased strongly to start the year, offering more evidence that the March slowdowns were attributable to adverse weather and giving hope to home buyers struggling with limited inventory,” Gudell said.
However, another expert expanded on the lack of construction workers, and the need for more affordable housing.
“Specifically for the housing market, construction employment, which needs to expand to increase the pace of housing starts and expand the housing stock, was a disappointment with only 6,000 new jobs reported,” First American Chief Economist Mark Fleming said. “The pace of construction job growth has been declining on a year-over-year basis since the beginning of 2016. In recent months averaging only 2% to 3%.”
“Home builders are reporting that the lack of construction workers is hampering their ability to build homes, which is a desperately needed source of supply, as most markets already have very tight inventories of homes for sale,” Fleming said. “In fact, we have been underbuilding residential housing relative to demand since 2009.”