The unemployment rate edged down slightly to 3.9 percent in July, according to the latest employment and wages report by the Bureau of Labor Statistics. This 0.1 percentage point decline in unemployment was driven by employment opportunities in professional and business services, manufacturing, and healthcare and social assistance. The number of unemployed persons in the United States stood at 6.3 million in July.
All told, nonfarm payroll employment increased by 157,000 in July, which is lower than the average monthly gain of 203,000 over the previous 12 months, the report indicated.
Doug Duncan, Chief Economist at Fannie Mae pointed out that “July’s job gain was weighed down by a massive drop in employment in sporting goods and hobby stores, which is likely a one-off event related to the bankruptcy of a toy company, and thus we don’t see any warning signals flashing for the labor market.”
Additionally, “total non-farm payroll jobs have now increased every month since October 2010,” according to Mark Fleming, Chief Economist at First American.
“Involuntary part-time workers,” those who are employed part-time but would prefer to work full time totaled about 4.6 million people, similar to June but down 669,000 from a year ago, according to the report.
Another bright spot in the employment report came for those with less than a high school degree, “as their unemployment rate fell to a record low since the series began in 1992, according to Duncan.
Construction employment increased by 19,000 and is up 308,000 jobs over the year.
While this is good news for the construction sector, Duncan pointed out it won’t be enough to combat the low supply dynamic in the housing market.
“Residential construction employment climbed higher at a pace unlikely to keep up with building demand, which suggests no meaningful relief from the housing supply crunch in the second half of the year,” he said.
Average hourly earnings for all privately employed, nonfarm employees rose 7 cents over the month of July to $27.05 and were up 2.7 percent over the year. For private-sector production and nonsupervisory employees, wages rose by 3 cents to $22.65 in July.
The overall 2.7 percent annual gain “remains below the pre-recession pace of growth,” Fleming pointed out.
With home prices rising briskly, that extra seven or three cents may not make much of a difference to future homebuyers. Danielle Hale, Chief Economist at Realtor.com, said, “While the extra income will help offset the pinch of higher mortgage rates, prices are still growing much faster. The median U.S. home listing price was up 9 percent in July.”
She added, “Job growth is generally a positive factor for the housing market, but with few affordable homes for many buyers, what’s most needed now is income growth and new construction.”
Fleming reacted somewhat more optimistically to wage growth, stating, “House price appreciation has exceeded wage growth for six years, so any signal that wage growth may be closing the gap is good news for the housing market.”