KEY MARKET INDICATORS as of Oct 05, 2018
September Jobs Report
The U.S. job market added 134,000 jobs in September, the smallest gain since last September. The job market is at full employment, with the overall unemployment rate falling to 3.7% – its lowest level since 1969. Despite such low unemployment rate, job growth has held up well in 2018 – averaging 208,000 jobs a month so far this year, slightly ahead of the pace in 2016 and 2017. An important data point for interest rate-sensitive sectors such as housing will be wage growth. Wages grew by 2.9% in September. While faster wage growth is usually a good thing as it boosts the income of homebuyers and homeowners, it is generally a sign of labor market tightening and accelerating inflation at this point in the cycle, and will drive mortgage rates higher. Compared to 2016 and 2017, wage growth has accelerated by around 20 basis points, while inflation has accelerated by 40 to 60 basis points. Higher inflation rates are already raising mortgage rates.
Job growth in September was led by professional and business services, transportation, and manufacturing. The construction sector, which has benefited from the ongoing housing recovery also continued to report strong job growth. Consumer sectors such as restaurant and tourism and retail, however, both reported job losses in September. Compared to a year ago, the fastest growing sectors are natural resources and mining, reflecting higher energy prices and a growing housing market.
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 at the lowest level since 1970. The unemployment rate for the 25-34 year-olds fell below 4% in May, and the unemployment rate for the 35-44 year-olds fell below 3%. Over the past two years, around two-thirds of the job growth has gone to individuals in this age group.
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Disclaimer: Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Genworth Mortgage Insurance and are subject to change without notice. Genworth Mortgage Insurance has no obligation to provide revised assessments and assumes no duty to update information in the event of changed circumstances. While we have gathered this information from sources believed to be reliable, Genworth Mortgage Insurance cannot guarantee the accuracy of the information provided. Certain data discussed in this report is publicly available only on a time delayed basis. Genworth Mortgage Insurance strives to analyze data as it becomes available, but makes no representation that all data is reviewed immediately upon release.