Rising employment rate brings hope to housing market

Jobs increased by 213,000 in June

As jobs increased in June, the unemployment rate rose to 4%, according to the latest Employment Situation Summary report from the U.S. Bureau of Labor Statistics.

According to the report, the number of unemployed persons increased by 499,000 to 6.6 million. This is down from last year when the number of unemployed persons was 7 million.

The jobless rates for all other groups, including men at 3.7%, teenagers at 12.6%, whites at 3.5%, blacks at 6.5%, Asians at 3.2% and Hispanics at 4.6%, all showed little or no change over the month.

Total non-farm payroll employment increased by 213,000 in June and has grown by 2.4 million over the past 12 months.

The majority of job gains in June can be attributed to an increase in jobs in professional and business services, manufacturing and healthcare.

Here are some of the areas which showed major changes in June:

  • Employment in professional and business services increased 50,000
  • Employment in manufacturing increased 36,000
  • Employment in healthcare increased by 25,000

In June, retail trade lost 22,000 jobs, largely offsetting a gain of 25,000 in May.

Employment changed little over the month in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality and government.

The average workweek for all employees on private non-farm payrolls remained unchanged at 34.5 hours in June. Average hourly earnings increased by $0.05 to $26.98.

The reduction of unemployed Americans could offer some relief for the housing industry.

“If the unemployment rate continues to remain low, companies may continue to push salary increases which could offer some relief for home buyers, Chief Economist Danielle Hale said.

“There are more than 15% fewer entry-level homes under $200,000 on the market this year than last year. In contrast, there are slightly more $350,000 plus homes on the market than last year,” Hale continued. “If raises help buyers reach beyond entry-level homes, it could lead to a better match up of home shoppers and available homes.”

However, wages have not caught up to the influx of employment, which could prove to still be a challenge for homeowners.

Wages were up 2.7% year over year, unchanged from the previous month. Despite the low unemployment rates, wages continue to disappoint,” LendingTree Chief Economist Tendayi Kapfidze. “The increase in the labor force participation rate may offer a clue as to why. The large pool of available people to enter the labor force is a drag on wages as it reduces the bargaining power of workers who are already employed.”

But the report offers some optimism for the construction industry, as construction employment increased by 13,000 jobs in June. It has now increased by 282,000 over the year.

“This month’s increase by nearly 4,000 residential construction jobs compared to May, a 0.5% increase, sends a positive message to home buyers and the housing market, as it indicates further increases in housing starts are likely and more housing supply may be on the way,” First American Chief Economist Mark Fleming said.

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