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October Employment Numbers Point to More Fed Action
October’s U.S. jobs report continued a months-long streak of gains, but also indicated a slowdown, said the Mortgage Bankers Association’s chief economist, Mike Fratantoni. “While the pace of growth slowed in September to 263,000, this is still faster than can be sustained in the U.S. economy over time,” he said. “And other data clearly signaling a slowing economy lead us to forecast a sharp drop in job growth over the coming months.”
In a research brief Friday, Marcus & Millichap observed that both the unemployment rate and broader underemployment measure fell back to multi-decade lows in October. “A decline in the number of people without a job or seeking additional hours reflects a general lack of labor supply,” according to Marcus & Millichap. “This imbalance is supporting elevated wage growth and contributing to inflation.”
Accordingly, Fratantoni added, “We expect the Federal Reserve will increase rates by at least another 50 basis points in November and could do more if inflation fails to decelerate.” It’s an expectation that was reflected in stock market prices on Friday.
Looking at the real estate-related implications of October’s hiring, Lawrence Yun, chief economist at the National Association of Realtors, observed, “Construction and general contractor jobs also expanded, though these lean more toward the commercial building of warehouses and apartments and less building of single-family homes. The traditional office-using jobs in the professional business service sector boomed, with 46,000 monthly net gains and over one million in a year.”
However, added Yun, “office vacancy rates remain high, and very few new office buildings are being started. That means retail shops in the suburbs will do well, as workers are at home and not downtown. Though there has been some return of housing demand closer to the city recently, the long-term trend could be in the outer suburbs.”
- ◦Economy
