Eye On Housing
According to the Employment Situation for October 2017 reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment rose by 261,000 in October and the unemployment rate decreased to 4.1% in October, from 4.2% in September.
Employment rebounded sharply in October after hurricane-related disruptions in September. Employment growth reinforced the Fed’s statement on Wednesday that “the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions.” Employment growth has averaged 167,000 per month so far this year, compared with the average monthly growth of 187,000 over all of 2016. Excluding the small increase in September (a revised 18,000 increase from the original estimate of a 33,000 decrease), the average monthly job growth over 2017 to date is 185,000.
Figure 1 presents the relationship between the monthly change in payroll employment, average weekly unemployment insurance claims and the occurrence of hurricanes from 2001 to now. The unemployment Insurance (UI) weekly initial claims measure emerging unemployment and is shown by the red line. The dark blue bar is the monthly change in payroll employment. The light blue bars represent hurricanes.
As illustrated last month, although hurricanes coincide with increases in UI claims and outright declines in employment or lower monthly growth, the impact of hurricanes on employment will dissipate over time. Here are four examples:
In 2005, during the period that Hurricanes Katrina and Rita made landfall, after UI claims spiked in September, UI claims decreases and the monthly growth in employment climbed to 341 thousand in November, from 67 thousand in September.
In August 2010, during the period that Hurricanes Alex and Earl made landfall, UI claims rose and employment dropped 36 thousand monthly. Two months later, UI claims declined and employment rose by 262 thousand in October.
In November 2012, during the period that Hurricane Sandy made landfall, UI claims increased and the monthly growth in employment slowed down to 132 thousand, from 146 thousand. One month later, in December UI claims declined and the monthly growth in employment increased to 244 thousand.
Similarly, during the period that recent Hurricanes Irma and Harvey, UI claims spiked and the monthly growth in employment decreased to 18 thousand last month, according to revised estimate released by the BLS. However, this month UI claims declined and employment growth rebounded, confirming that the impacts of hurricanes on employment are not persistent.
Monthly employment data released by the BLS Establishment Survey indicate that construction added 11,000 jobs in October, after an 11,000 increase in September. The September increase was revised from its original estimate of an 8,000 increase.
Meanwhile, residential construction employment rose by 13,300 in October, after a 500 increase last month. The September increase was revised from its original estimate of a 3,500 decrease. The 6-month moving average of job gains for residential construction now was 5,167 a month. Over the last 12 months, home builders and remodelers have added 98,500 jobs on a net basis. Since the low point of industry employment following the Great Recession, residential construction has gained 734,100 positions.
In October, the unemployment rate for construction workers declined to 5.0% on a seasonally adjusted basis, from 5.7% in September. After reaching a peak rate of 22% in February 2010, the unemployment rate for the construction sector has been steadily declining and remains relatively low.
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