Review of the Week of December 4, 2023: Labor Data and Housing Market

As December unfolded, it brought along a mix of labor sector data and insights into the housing market. Here's a comprehensive review of the key highlights from the week of December 4, 2023:

BLS Jobs Report Not What We Wanted

The Bureau of Labor Statistics (BLS) delivered the latest employment figures for November, painting a somewhat mixed picture:

  • Job Creation: In November, the U.S. economy added 199,000 jobs, slightly surpassing the forecasted 190,000. However, revisions to the September and October data revealed a subtraction of 35,000 jobs from those months.

  • Unemployment Rate: The unemployment rate declined from 3.9% to 3.7%, indicating a positive trend in employment.

  • Household Survey vs. Business Survey: The Household Survey, which generates the Unemployment Rate, reported a substantial 747,000 job gains in contrast to the Business Survey's figures. This discrepancy highlights the complexity of labor market analysis.

  • Wage Growth: While average hourly earnings increased by 0.4% in November, the year-over-year figure decelerated to a 4% increase. This deceleration could potentially alleviate concerns of wage-pressured inflation.

Private Payrolls Below Expectations

ADP's Employment Report for November revealed some interesting trends:

  • Job Growth: Private payrolls added 103,000 jobs, falling short of expectations. Service-providing industries were the primary contributors to job growth, although leisure and hospitality reported a loss of 7,000 jobs.

  • Wage Trends: Annual pay increases for both job stayers and job changers slowed, indicating a cooling in wage-pressured inflation.

  • Labor Market Shifts: Nela Richardson, chief economist for ADP, noted a shift in the labor market dynamics, particularly in the leisure and hospitality sector. This shift suggests ongoing changes in the post-pandemic labor landscape.

Job Openings Lower

The Job Openings and Labor Turnover Survey (JOLTS) offered insights into job openings and hiring rates:

  • Job Openings: Job openings declined significantly from 9.4 million in September to 8.7 million in October, missing expectations. This drop reflects potential challenges in the labor market.

  • Hiring Rate: The hiring rate remained at 3.7%, a historic low since the pandemic-induced shutdowns. A stagnant quit rate also indicates limited employer attempts to attract workers with competitive offers.

Jobless Claims

The weekly jobless claims data showed:

  • Initial Jobless Claims: A slight increase of 1,000, with 220,000 individuals filing for unemployment benefits for the first time.

  • Continuing Claims: A decrease of 64,000, with 1,861,000 people still receiving benefits after their initial claim.

While the decline in continuing claims indicates efforts by employers to retain workers, it's also becoming more challenging for job seekers to find employment.

Home Prices Hitting Highs

The housing market continued its upward trajectory:

  • CoreLogic's Home Price Index reported a 0.2% rise in home prices from September to October, marking the sixth consecutive month of record highs.

  • Projections: CoreLogic forecasts a flat home price trend in November, followed by a 2.9% increase in the year ahead. This suggests ongoing appreciation, with an estimated 7% increase in home values for 2023.

  • Black Knight: This data provider also noted a 0.2% increase in home prices in October, with a 4.6% year-over-year growth. Like CoreLogic, Black Knight's index is on track for a 7% full-year appreciation rate.

In Summary:

  • The labor market showcased mixed signals, with positive job creation and a declining unemployment rate but softer wage growth.

  • Job openings declined, suggesting potential challenges in attracting and retaining workers.

  • Home prices continued their ascent, with various indices indicating strong growth and wealth-building opportunities in real estate.

As economic conditions remain fluid, it's crucial to stay informed about the latest developments to make well-informed decisions in both the job market and real estate sector.

Disclaimer: The information provided is for informational purposes only and should not be considered as financial or investment advice. Economic conditions can change rapidly, and it is advisable to consult with financial professionals for personalized guidance.