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U.S. records strong jobs gains in October

The latest U.S. jobs report bodes well for a flagging residential real estate market. The economy added 250,000 jobs in October and the unemployment rate held steady, hovering near a 50-year low at 3.7 percent, according to the U.S. Department of Labor.

The top-line job creation number marked a vast improvement over a relatively weak September. The estimate for September was revised downward to 118,000 job additions. Job gains have averaged 218,000 over three months, the Labor Department reported.  

jobrepSignificantly, wage growth also hit a new watermark, rising by 3.1 percent annually in October. This is the first time wages have posted annual growth of 3 percent in nine years, according to the Mortgage Bankers Association. Hourly wages rose 5 cents for the period, to $27.30.

Fannie Mae Chief Economist Doug Duncan said the latest report further suggests a strong economy, but noted that some of the gain reflected a bounce-back from the storms in September. The hospitality sector gained 42,000 jobs, the strongest bounce since last October's recovery from Hurricanes Harvey and Irma. 

"The updated information released today suggests that the labor market remains strong and inflation remains manageable, supporting our call that the Fed will raise its key policy rate in December," Duncan said. "Meanwhile, the housing sector, another weather-sensitive industry, also registered job gains this month."

Industries adding jobs in October included healthcare (36,000 job additions); manufacturing (32,000); construction (30,000); and transportation (25,000).

A strong labor market and rising wages should provide a boost to the housing market, which has seen sales fall in comparison to last year with the uptick in rates. Home prices also have been rising at a much faster rate than incomes, eroding affordability. 

“In a strong report overall, the big news in this morning’s October jobs report was the annual change in wage growth exceeding 3 percent for the first time since April 2009,” said Joel Kan, associate vice president of economic and industry forecasts for the Mortgage Bankers Association.

“We are averaging 212,000 jobs per month in 2018 to date — one of the strongest years for job growth in recent history — and in combination with the low unemployment rate, this will continue to push wage growth higher,” Kan said. 


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