While the labor market briefly bowed under pressure this summer, August’s jobs numbers have “rebounded in a big way,” as characterized by Realtor.com® Senior Economist Jake Krimmel.
The latest Employment Situation Summary from the Bureau of Labor Statistics saw the U.S. add 162,000 jobs in August, with the unemployment rate unchanged at 4.1%.
Employment specifically grew in food services and drinking places (up by 59,000 jobs), and in local government education (up by 42,000 jobs). Manufacturing (+16,000) and healthcare (+13,000) also saw smaller increases.
Mike Fratantoni—SVP and chief economist of the Mortgage Bankers Association—stated that the labor market remains “low-hire/low-fire,” but overall this report “confirms that the job market is resilient.”
Krimmel added that August’s data beat out economist predictions, as they had anticipated payrolls only increasing by 53,000 to 65,000, and expected the unemployment rate to rise to 4.2%.
Notably, this report’s revisions for June and July also showed there was some unseen strength in the labor market this summer after all. Specifically, July’s original fall of 23,000 jobs was upwardly revised into a 21,000 job gain. Â
In terms of housing, Krimmel said that while August’s data was an “upside surprise,” he “wouldn’t expect it to move housing demand much on its own.”
“The median homebuyer or seller right now likely is not concerned about unemployment or median earnings growth stats,” he continued. “Instead, they are watching mortgage rates, prices, and whether to get off the sidelines or re-price their home if they’re already in the market. If today’s report ends up mattering for housing at all, it will be through the Fed and mortgage rates, not through some more direct channel like wage growth.”
Looking at how this report may affect the next Federal Reserve FOMC meeting, however, is a bit more nuanced.
Krimmel noted that the “Fed’s attention right now is almost entirely on inflation, not the labor market,” and that “non-reaction is the real story here.”
“After weeks if markets swinging wildly on every Fed speech, an impressive jobs report barely registered, which tells us exactly what side of the dual mandate matters,” he continued. “It’s all about inflation, which puts all eyes on next week’s CPI print as the final decisive number for the FOMC.”
Krimmel concluded that what the Fed will be keeping eyes on is how inflation acts not just next week, but throughout the fall season. He said that is what will “set the stage for where mortgage rates land early next year, right as buyers and sellers start making plans again.”
