On Friday, the U.S. Bureau of Labor Statistics reported its Employment Situation Summary for October 2017—reporting that the nation’s unemployment rate decreased by 0.1 percentage point to 4.1 percent, and the number of unemployed persons decreased by 281,000 to 6.5 million.
Since the beginning of 2017, the unemployment rate has declined by 0.7 percentage point, and the number of unemployed persons has decreased by 1.1 million.
According to Doug Duncan, Chief Economist at Fannie Mae, the employment situation summary is underwhelming—as the much-anticipated rebound in October nonfarm payroll was less than market expectations at 261,000. And even with the 90,000 upward revisions in the hurricane-affected months, the average monthly job gain for the last three months came in at 162,000—a slowdown from the year-to-date monthly average gain through July of 171,000.
Additionally, flat average hourly earnings brought annual wage growth to 2.4 percent, a four-tenths payback from the solid gain of the prior month, when the hurricanes prevented many low-wage employees from working.
“The seemingly positive headline in the household survey masked some bearish details, as the one-tenth decline in the unemployment rate occurred amid a 0.4 percentage point plunge in the labor force participation rate, the biggest monthly decline in four years,” Duncan said.
Duncan continued, “One silver lining was the large drop in the broadest measure of labor underutilization, U-6, to 7.9 percent, matching the lowest rate of the last expansion. The bottom-line is that slack in the labor market is receding but the hiring trend is slowing and wage gains remain muted.”
In addition, according to analysis from Mark Fleming, Chief Economist at First American, despite overall declines in unemployment, in sectors like homebuilding are still facing labor constraints.
“Home building, particularly housing starts, faces a number of headwinds at the moment, including access to buildable lots with the appropriate infrastructure, rising regulatory costs, increased building material costs and labor constraints,” said Fleming. “Home building still requires manual labor as a key input into the production process and productivity gains in this sector have lagged behind overall productivity improvements . . . While, the gains made this month are a positive sign, home builders would like to hire more labor, if only they could fill those openings.”
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