Private sector job growth slows in May, which is good for housing

by WOHe

Employment in May increased by 431,000 jobs at a seasonally adjusted rate following an increase of 290,000 jobs the month before, which should be good news for housing.

However, the large increase in May was primarily because the Census Bureau added 411,000 temporary census workers. (Overall, government jobs increased only 390,000 for the month, largely because of cutbacks at the state and local levels).

The private sector added 41,000 jobs for the month, including 31,000 temporary workers, and the unemployment rate fell from 9.9% in April to 9.7% in May.

The heavy reliance on temporary workers indicates that businesses are still uncertain about the recovery and, in particular, how long the boost in demand for their products and services will last. Hiring temporary workers at this stage in the recovery enables employers to hedge their bets. If demand is sustained, as NAHB forecasts, many of the temporary positions in the private sector will become permanent.

Despite the disappointing private sector job growth for May, NAHB is forecasting that employment will continue to improve throughout 2010 and 2011. The unemployment rate peaked at 10.1% in October 2009. NAHB expects it to be near 9.3% by the end of the year.

Employment stability and job growth are keys to a housing recovery. In addition to alleviating workers’ fears about their next paycheck, improving employment measures help boost the confidence of households that are considering buying a home.

While overall job growth has been positive, residential construction has been bleeding jobs, albeit at a slower rate during the past few months. In May, 6,100 jobs were lost, down from the 6,800 job losses the month before and from the 81,700 residential construction jobs lost in November 2008.

Total construction employment, including non-residential employment, fell 35,000 in May after rising the previous two months. The overall unemployment rate for construction inched upward to 20.6% in May from 20.3% the month before.

Residential construction is mixed story
The slow but steady improvement in single-family construction activity is reflected in the value of construction put in place, with the seasonally adjusted annual rate rising 3.4% in April from the month before and 29.0% from a year earlier — when construction activity was at an extremely low level.

Multifamily construction continued its slowdown in April, with a 1.9% decline from March and a precipitous 57.4% drop from a year earlier.

In April, remodeling expenditures for improvements rose 6.3% from March and were up 6.5% from a year earlier.

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