One month the employment numbers disappoint and the next they sizzle. It’s enough to give an interested property manager whiplash!
In a recent article I reported that “On Friday, June 3 the U.S. Bureau of Labor Statistics announced an addition of just 38,000 nonfarm payrolls during May 2016. Economists had been expecting 160,000. This was huge disappointment!” A little more than a month later on Friday, July 8 the same U.S. Bureau reported that the economy added 287,000 new payrolls in June, the biggest gains of the year. Again we are surprised and confounded.
So what’s really going on and what does it suggest for the “real economy,” the one we live in each day? To begin with it demonstrates how irregular and confusing government statistics truly are. The weak jobs number in May, which was revised downward to 11,000 jobs, gave Fed officials some pause when considering the idea of interest rate increases, according to the FOMC’s June minutes.
“Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market,” the minutes revealed. With the strong June jobs report and the upward revision of April’s payroll numbers to 144,000, May’s report looks like an outlier, said Vincent Reinhart, chief economist for Standish Mellon Asset Management and a former economist for the Federal Open Market Committee.
According to a July 8 Yahoo Finance article, Reinhart doesn’t expect the Fed to raise rates based on the June data. “I don’t think they move that quickly…with interest rates lower around the world, it’s just getting harder for them to see that they have to raise rates very much,” he said. Growth in wages paid has been another area of concern for the Fed, with Federal Reserve Chair Janet noting in May that the lack of growth “is suggestive of some slack in the labor market.”
In June average hourly earnings increased 2.6% year over year, slightly lower than the 2.7% expected. “Wages have slowly gained momentum over the past six months, Reinhart said, which gives Fed officials some room before they have to worry about inflation.” The Department of Labor latest report showed that the unemployment rate increased by 0.2 % to 4.9 % in June, and the number of unemployed persons increased by 347,000 to 7.8 million.
“These increases largely offset declines in May and brought both measures back in line with levels that had prevailed from August 2015 to April 2016”, the government report surmised.
Meanwhile, on July 8 the U.S. stock market (as measured by the S&P 500) set another all-time closing high. This surge defied disappointing 1st quarter corporate earnings, with Q2 expected to be the fifth consecutive quarter that earnings have decreased year over year.
The takeaway for the property management business is like the old adage “facts don’t lie.” There are millions of unemployed people looking for jobs and millions more that have stopped looking.
Interest rates are at or near all-time lows and so are mortgage rates. It’s a great time …read more
From:: Property Management