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KEY MARKET INDICATORS as of Mar 12, 2018
February Job Market
The U.S. job market reported its best month since July 2016, adding 313,000 jobs in February. The job market is at full employment, with the overall unemployment rate at just 4.1%. The maturing job market means that it will be harder for the economy to add more jobs without triggering wage inflation. An important data point for interest rate sensitive sectors such as housing has been wage growth. Wages grew by an estimated 2.6% in February, and growth rate for January was revised down from 2.9% to 2.7%. Those numbers were lower than the market had expected, making it more likely that the Federal Reserve will be raising interest rates gradually. That is good news for potential
homebuyers, since a steep increase in mortgage rates would overwhelm a moderate acceleration in wage growth by making housing less affordable.
Construction, retail, and professional and business services reported the most monthly job gains in February. The ongoing housing recovery continued to draw more workers into the construction sector, making it the leading sector for job growth. The impact of the new tax law is also beginning to kick in, boosting after-tax income and consumer spending. Consumer sectors such as retail, restaurant, and tourism is beginning to see faster job growth. This will look similar to 2016, when lower energy prices translated to higher after-tax income, higher consumer spending, and faster job growth in consumer sectors. Manufacturing job growth has also been very strong in the last 12 months due to a weaker U.S. dollar and less regulation, adding a total of 224,000 jobs.
The job market is providing a favorable economic environment for potential first-time homebuyers. Unemployment rates for people in the primary homebuying age (25-34 and 35-44) are now lower than the trough in 2006-07, and approaching the lowest level since the late-90s and early-2000s.