KEY MARKET INDICATORS as of June 05, 2017
May Jobs Report
The job market posted slower job growth and a lower unemployment rate in May.
Summary – Employers added just 138,000 jobs over the month, while the unemployment rate fell to 4.3% – its lowest level since May 2001. The economy is at full employment and this has made it more difficult for employers to hire unemployed workers, slowing job growth rate in the economy. This has been the trend since 2014, and we expect more of the same. One anomaly is that so far this year, the tighter job market has not resulted in faster wage growth. Wage growth peaked at 2.7% in September 2016, but has slowed to 2.5% growth in May. For the Federal Reserve, which is in the process of slowly raising short term interest rates, the May jobs report likely means staying on the same path. There were few signs of overheating in this jobs report that would warrant a faster pace of monetary tightening. For the U.S. economy, the combination of slower job growth and slower wage growth means that slower economic growth is likely to continue.
Among the major industries, leisure and hospitality, education and health, and professional business services had a good month, adding a combined 116,000 jobs in May. Hiring in construction continued to be slow in May, but the housing sector rebounded – adding 7,000 jobs. Both retail and wholesale remained weak in May.
The job market continued to be very positive for potential first-time homebuyers. The unemployment rate for people in the primary homebuying age (25-34 and 35-44) increased to 4.1% in May, still close to the lowest level since 2007. It is also not far from the trough of 3.7% reached in the last economic cycle.
* FHFA Purchase-Only Home Price Index