The jobs market continued to grow in January with the Bureau of Labor Statistics reporting an increase in jobs by 304,000 during the month compared with 223,000 during the same period a year ago. However, the report indicated that unemployment grew by 4 percent, led mostly by the partial government shutdown that lasted through most of the month. Employment in construction rose by 52,000 in January with job gains occurring among specialty trade contractors in both residential as well as non-residential construction.
According to Doug Duncan, Chief Economist at Fannie Mae, the report confirmed that the labor market conditions remained strong despite the "downside risk from the partial government shutdown."
"Meanwhile, residential construction recorded strong employment growth, adding the most jobs since February 2018," Duncan said. "The additional jobs suggest that positive housing construction activity will continue, helping to alleviate the for-sale housing shortage."
The report also revealed a growth in hourly wage earnings that remained near the expansion high seen in December 2018. "Wages were up 3.2 percent year-over-year, the strongest since 2009," said Tendayi Kapfidze, Chief Economist, LendingTree. "Despite the low unemployment rates, wages have been disappointing so this number is quite encouraging."
According to Danielle Hale, Chief Economist at realtor.com, the rising income was another good sign, especially for first-time homebuyers looking to enter the market. "One of the most positive indicators in today's report is continued wage growth, with hourly earnings up 3.2 percent year over year in January. With rising wages and slowing home price growth, dreamers may be better positioned to make homeownership a reality as we enter the spring buying season," she said.
"The volatility in financial markets in January, primarily based on concerns about a global economic slowdown, tariff talks and domestic monetary policy tightening, has benefitted the housing market as it has inspired some opportunistic homebuyers into action before the start of the busy spring home buying season," said Mark Fleming, Chief Economist at First American.
The growth in jobs comes at a time when the Fed has also adopted a wait and watch approach to economic conditions. "While earnings growth remains strong, broader inflation pressures appear to be contained," Duncan said. "Amid muted inflation and recent global economic and financial developments, the Fed’s tone has become more dovish, having recently communicated that it will be patient as it determines future adjustments to its key policy rate. In the context of growing risks to the economy, today’s jobs release supports our call that the Fed will raise the target range of the federal funds rate once more, in June, before pausing."
According to Fleming, "While financial markets remain volatile, the real economy and labor market continue to remain strong, which should benefit housing." Additionally, he said that the current mortgage rate environment that had seen rates decreasing to 4.44 percent along with the wage growth increase seen in January had "increased consumer house-buying power."