Economic Growth Exceeds Expectations in January

The U.S. economy grew by 225,000 jobs in January, according to the Bureau of Labor and Statistics, with the most notable gains coming in construction, health care, and transportation and warehousing. 

The unemployment rate was unchanged at 3.6%. 

Additionally, the Bureau revised both the November and December reports. November’s report was revised up by 5,000 from 256,000 to 261,000 and December’s grew to 147,000 to 145,000. 

Average hourly earnings rose for all non-farm payrolls for the month by 7 cents to $28.44. Earnings have increased over the past year by 3.1%. 

The economy was projected to gain just 165,000 jobs in December, according to the consensus from Bloomberg.

Bloomberg, however, noted revisions to past data caused some of the economic gains under the Trump administration to falter. 

Revisions dropped the 2018 job gain to 2.31 million from 2.68 million and both the 2017 and 2019 job gains were about 2.1 million. Both are lower than the 2.35 million average increase during the final year of the Obama administration. 

The report is welcome news to the housing industry, as First American’s Deputy Chief Economist Odeta Kushi called the 1.9% annual gain in residential construction labor a “bright spot.” 

“This is a tailwind for the housing market, as finding ways to increase the productivity of construction workers is critically important to alleviating the labor shortage challenge and the gap between household formation and home building,” Kushi said. 

 

Slow and steady wins the race, and this economic expansion is proving that. Continued strength in the labor market will continue to buoy the consumer, and thereby, the housing market.

— Odeta Kushi (@odetakushi) February 7, 2020

Kushi continued by saying, “Build it and they will buy it. The housing market is being buoyed by lower mortgage rates, favorable demographics, and the continued yearly growth in wages, which contributes to higher household income and stronger purchasing power.”

Realtor.com’s Chief Economist Danielle Hale said within the muck of bad news in the headlines, “it’s reassuring that the U.S. jobs market continues to perform.”

“Whether this confidence will translate into home purchases this spring buying season is a key question,” Hale said. “Low mortgage rates have improved the affordability of homes compared to one year ago, especially when compared with renting, but inventory challenges remain and could worsen as the large homebuilding shortfall persists, making this spring market more affordable than those on the horizon.”