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U.S. adds 164K jobs in April, unemployment drops


Job growth continued to cool in April and wage gains were minimal, but the unemployment rate fell to an 18-year low, the U.S. Department of Labor reported.

“The April jobs report was lukewarm,” Fannie Mae Chief Economist Doug Duncan said. The economy added 164,000 jobs, which was the second consecutive sub-200,000 job month in a row.

unemployrateUnemployment dropped to 3.9 percent, the lowest rate since April 2000, after remaining stable at 4.1 percent since this past October. The dip can be misleading, however.

“The first drop in the unemployment rate in six months was the result of a shrinking labor force,” Duncan said. “The second straight drop in the labor force participation rate was quite disappointing, as it was driven by a decline in the rate for prime-age workers.”

Hourly wages moved up by just 4 cents, to $26.84. Over the past year, wages have come up by an average of 67 cents, or 2.6 percent. Home prices, by contrast, have been rising on a national basis by around 6 percent each year.  

There were some bright spots. The sectors gaining jobs in April tended to be in the higher-paying sectors that support the office real estate market and home sales.

These included professional and business services (up 54,000 jobs), manufacturing (up 24,000) and health care (up 24,000). The mining industry also continues to recover, adding 8,000 jobs in the month and 86,000 positions since the market low in October 2016. That is good news for oil-patch states that saw some uptick in foreclosures after the industry was hammered by lower oil prices.

The overall job gains for February and March also were revised upward by a total of 30,000 jobs. Employment gains totaled 135,000 jobs in March and 324,000 in February. Over the three months through April, job gains have averaged 208,000 per month.

Duncan also noted a continued uptick in construction jobs.

“For housing, the rebound in construction employment suggests that building will continue its upward grind,” Duncan said. “Our takeaway from the report is that recent economic conditions support a gradual pace of monetary tightening. We are comfortable with our calls of three rate hikes this year amid ongoing shrinking of the Fed’s balance sheet.”

National Association of Realtors Chief Economist Lawrence Yun said the cumulative gains in jobs should have already translated into a surge in homebuying to begin the spring, but that hasn’t happened. He said the market has been hamstrung by tight inventories.

"Today there are more than 16 million more jobs compared to back in 2002, yet home sales are running essentially even, meaning there is plenty of pent-up housing demand,” Yun said. “What is needed is new supply and new home construction.”

Yun also said that while the number of construction workers has been rising, there still aren't enough workers available to keep pace with the demand for new homes.


 

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