Posts Tagged ‘jobs growth’
In today’s jobs report, we’re told 169,000 jobs were added in the U.S. jobs market in August. (Source: Bureau of Labor Statistics, September 6, 2013.) Aside from the fact we need a minimum of 200,000 jobs a month to see a substantial change in the U.S. jobs market, the details in this morning’s report are particularly weak and concerning.
Actually, let’s start with the previous month’s downward revision in employment. The revised numbers that came out this morning show the U.S. economy added only 104,000 new jobs in July, not the 162,000 we were originally told were created in that month.
Moving to August, this morning’s jobs market report shows the only growth in jobs is in the low-wage-paying sectors. Add up all the new retail, health care, business services, and hospitality jobs, and 71% of all jobs created in August were in the low-paying sectors!
The underemployment rate, which includes those people who have given up looking for work or who have part-time jobs because they can’t get full-time jobs, still sits near 14%! (The politicians will never talk about the underemployment rate—what economists like me consider the real employment rate—because this number shows the jobs market is not improving.)
So what type of growth did we see in August in jobs in the manufacturing, construction, and other sectors that pay a higher salary? Sadly, jobs growth in those sectors was dismal. The manufacturing sector of the U.S. economy only created 19,000 jobs in August—after a decline of 10,000 in July! Sectors like construction, mining … Read More
The National Association of Realtors (NAR) just reported July existing-home sales increased in the U.S. housing market to an annual rate of 5.39 million homes—up 17.2% from July of 2012. (Source: National Association of Realtors, August 21, 2013.)
And those companies that are closely related to the housing market like The Home Depot, Inc. (NYSE/HD) and Lowe’s Companies Inc. (NYSE/LOW) reported better-than-expected second-quarter earnings. All these companies cited the housing “recovery” as the reason their earnings did better.
So does this mean it’s a good time to buy homebuilder stocks, or to jump into companies related to the housing market? My answer is a resounding, “NO.”
In fact, the housing market is flashing four warning signs that the so-called “recovery” is losing steam.
First-time home buyers are not entering the housing market. Last month, first-time home buyers accounted for only 29% of all existing-home sales in the housing market, down 15% from July 2012. In a normal market, you’d want t first-time home buyers to account for 40% of all sales.
Mortgage rates are rising quickly. The rate on the standard 30-year fixed mortgage hit 4.6% this morning—up sharply from about 3.5% at the beginning of 2013
For months (in these pages), I’ve been saying interest rates would start to creep up. Even the NAR acknowledges the problem with higher interest rates. Its chief economist, Lawrence Yun, said this week, “Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines…the initial rise in interest rates provided strong incentive for closing deals. However, further rate increases … Read More
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