Eye On Housing
According to the Employment Situation for August 2017 reported by the BLS, total nonfarm payroll employment increased by 156,000 in August, less than 189,000 gains in July. Employment growth has averaged 176,000 per month so far this year, compared with the average monthly growth of 187,000 in 2016. Meanwhile, the unemployment rate ticked up slightly to 4.4% in August, from 4.3% in July. Even at 4.4%, the current unemployment rate remains below the non-accelerating inflation rate of unemployment (NAIRU), which the Congressional Budget Office estimates is 4.7% in the third quarter of 2017. The fact that the unemployment rate is below the NAIRU suggests that resource slack is disappearing.
The labor force participation rate was unchanged, at 62.9% in August. The number of employed persons decreased by 74,000; the number of unemployed persons increased by 151,000; the number of persons not in the labor force increased by 128,000.
Monthly employment data, released by the BLS Establishment Survey, also indicate that construction added 28,000 jobs in August, the largest increase in the past six months.
Residential construction employment rose by 13,000 to 2.7 million, including 766,000 builders and 1.94 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction now was 1,767 a month. Over the last 12 months home builders and remodelers have added 111,700 jobs on a net basis. Since the low point of industry employment following the Great Recession, residential construction has gained 726,500 positions.
In August, the unemployment rate for construction workers declined to 5.4% on a seasonally adjusted basis, from 6.1% in July. After reaching a peak rate of 22% in February 2010, the unemployment rate for the construction occupation had been on a general decline and remained relatively low recently.
Employment in the residential construction sector continues to grow, builders are optimistic about the current housing market, and job openings in the construction sector have risen. However, labor shortages remain a top challenge for builders and NAHB analysis suggests that the shortage is spreading. Although builders remain optimistic and the economy is stronger, labor shortages are one factor likely constraining housing production.
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