There was a mixed reaction Friday to the May jobs report, which reported the economy added just 75,000 jobs and the unemployment rate was remained at 3.6%.
“This morning’s jobs report is consistent with an economy that is continuing to slow from expansion highs, with non-farm payrolls increasing by only 75,000 in May,” said Doug Duncan, Fannie Mae’s Chief Economist. “This relatively weak number may reflect some risk aversion on the part of employers in the face of increased uncertainty in the economy, stemming from trade tensions and global economic weakening. Additionally, the previous two months were revised down by 75,000, indicating zero job growth on net.”
April’s jobs report reported the economy added 263,000 jobs--the strongest month for job growth since January.
The reported job growth of 75,000 is one of the weakest numbers since the financial crisis, but May was still the 104th consecutive month of gains. While the unemployment rate held at 3.6%, the participation rate came in at 62.8% for May.
Wages grew 3.1% year-over-year, which is the lowest growth since September 2018. Commentary from LendingTree's Chief Economist Tendayi Kapfidze suggests the latest jobs report indicates the economy is slowing. Kapfidze added that it is still too early for a rate cut as the three-month average of job growth remains strong at 151,000.
“On the other hand, the three-month moving average of payroll growth remains solid at 151,000, and wages continued to grow at a strong pace of 3.1 percent year over year,” Duncan said. “There was also good news in the household survey. The unemployment rate held steady at its historically low level, and the labor force participation rate was unchanged after dropping four-tenths in the last two months. Furthermore, construction employment increased by 5,200 this month, which should help to alleviate some of the supply constraints faced by homebuilders. This report is consistent with our forecast of a gradually slowing economy, and will likely not alter the Federal Reserve’s ‘patient’ stance towards rate changes, though we will learn more after the FOMC’s next meeting in two weeks.”
Danielle Hale, Chief Economist for realtor.com, said May’s earning growth of 3.1% is higher than the home sales growth, as reported by the National Association of Realtors in the West and Northeast, but still trails price growth in the Midwest and South.
“Wages that are catching up to price growth and mortgage rates 70-basis points below last year's level are helping homebuyers better keep up,” Hale said. “In fact, a look at our May Housing Trends Report shows that in nearly three-quarters of the hundred largest metro areas, housing affordability has improved compared to last year due to higher incomes, falling mortgage rates, and slowing home price growth.”
First American’s Chief Economist Mark Fleming said he perceives the latest jobs report as positive signs for the housing market.
“Wage growth, a primary driver of household income growth and house-buying power, remained strong with a 3.1 percent increase compared with a year ago,” Fleming said. “Add that to low mortgage rates and it’s a good boost for house hunters.”