The Latest Unemployment Report: Slow and Steady Improvement

Last Friday, the  Bureau of Labor Statistics  (BLS) released its latest  Employment Situation Summary . Going into the release, the  expert  consensus was for 1.58 million jobs to be added in July, and for the unemployment rate to fall to 10.5%. When the official report came out, it revealed that  1.8 million jobs were added , and the  unemployment rate fell to 10.2%  (from 11.1% last month). Once again, this is excellent news as this was the third consecutive month the unemployment rate decreased.There is, however, still a long way to go before the job market fully recovers. The  Wall Street Journal  (WSJ) put a potential  date  on that recovery: “July’s payroll growth, at 1.8 million, still leaves total payrolls 12.9 million

lower than in February. And yet if job gains continued at July’s pace, that deficit will be erased by March 2021. If payrolls reclaim their last peak in 13 months, that would be remarkably fast. It took more than six years after the last recession.” Permanent vs. Temporary Unemployment During a pandemic, it’s important to differentiate those who have lost their jobs on a temporary basis from those who have lost them on a permanent basis.  Morgan Stanley  economists noted in the same WSJ article: “The rate of churn in the labor market remains incredibly high, but a notable positive detail in this month’s report was the  downtick in the rate of new permanent layoffs .” To address this, the  core  unemployment rate becomes increasingly important. It identifies

the number of people who have permanently lost their jobs. This measure subtracts temporary layoffs and adds unemployed who did not search for a job recently. Jed Kolko,  Chief Economist  at  Indeed  and the founder of the index  reported : “Core unemployment fell in July for the first time in the pandemic. That’s the good news I was hoping for.” What about the housing market? The housing market has continued to show tremendous resilience during the pandemic. Commenting on the labor report, Robert Dietz,  Chief Economist  for the  National Association of Home Builders  (NAHB),  tweeted : “Housing continues to rebound in another positive labor market report. Home builder and remodeler job gains of 24K for July. Residential construction

employment down just 56.4K compared to a year ago. Total residential construction employment at 2.85 million.” Bottom Line We should remain cautious in our optimism, as the recovery is ultimately tied to our future success in mitigating the ongoing health crisis. However, as Mike Fratantoni, Chief Economist for the Mortgage Bankers Association, reminds us : “The pace of job growth slowed in July, but the gains over the past three months represent an impressive rebound during the ongoing economic challenges brought forth by the pandemic.” http://tinamiller.delexrealty.com