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The Week Ahead: A Happy New Year for the Job Market?

Job Market BH

The Bureau of Labor Statistics (BLS) will release its data on the January 2017 Employment Situation on Friday.

According to data from BLS' December report, 156,000 jobs were added last month, and job growth has averaged 165,000 over the three-month period from October to December—the lowest three-month average since June. The unemployment rate (4.7 percent) was changed little from November, and the labor participation rate (62.7 percent), which has hovered near a 40-year low for much of the last year, rose slightly from November to December.

Wage growth–a key factor in housing growth according to many economists–ticked up according to the Bureau of Labor Statistic (BLS) Employment Situation covering December 2016. Those numbers were up following a decline over the month of November. However, despite the increase in purchasing power brought on by higher wages, some economists worry how much of those increased wages are a result of minimum wage increases are caused by minimum wage increases and a lack of skilled labor.

The BLS data showed the average hourly wage rising by 10 cents from November 2016 and by 2.9 percent over the year up to $26.

“Though job creation slowed according to December’s employment report, we have now seen a record 75 months of job growth,” said Jonathan Smoke, Chief Economist at Realtor.com. “Growth in the labor market is slowing down for the same reason we’re seeing sluggish growth in existing home sales: we have a supply problem. With job openings at near record levels, we can expect further economic growth to lead to higher wages. This growth should lead to higher household incomes and stronger consumer confidence.”

Home Sales Index

November was a month of poor performance for pending homes sales, which are based on contract signings. The most recent Pending Home Sales Index (PHSI) from the National Association of Realtors (NAR), shows that pending home sales were at their lowest point in nearly a year. Only one of four regions experienced gains both over-the-month and over-the-year.

“The budget of many prospective buyers last month was dealt an abrupt hit by the quick ascension of rates immediately after the election. Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract,” stated NAR Chief Economist Lawrence Yun.

The PHSI was down by 0.4 percent year-over-year, and it dropped from a level of 110.0 in October down to 107.3 in November. The reading of 107.3 was the lowest for the PHSI since January 2016, which was largely caused by the shortage of homes for sale.

The Northeast was the only region out of four where pending home sales increased, rising by 0.6 percent over-the-month and 5.7 percent over-the-year in November. In the South, West, and Midwest regions, pending home sales declined both monthly and annually.

“Healthy local job markets amidst tight supply means many areas will remain competitive with prices on the rise. Those rushing to lock in a rate before they advance even higher will probably have few listings to choose from,” Yun said. “Some buyers will have to expand the area of their home search or be forced to delay in order to save a little more money for their down payment.”

Here is the lineup for the week:
Monday, January 30
NAR, Pending Home Sales for December 2016, 10 a.m. EST
Tuesday, January 31
S&P CoreLogic Case-Shiller Home Price Index for November 2016, 9 a.m. EST
Wednesday, February 1
Federal Open Market Committee Announcement, 2 p.m. EST
Friday, February 3
BLS, Employment Situation for January 2017, 8:30 a.m. EST

About Author: Phil Banker

Phil Banker began his career in journalism after graduating from the University of North Texas. He has covered a number of communities across Texas and southern Oklahoma, writing news and sports for publications including the Ardmoreite, Ennis Daily News and the Plano Star-Courier. He is currently a contributor to DS News and The MReport.
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