9 March 2018
The U.S. economy added 313,000 jobs in February and the unemployment rate remained historically low at 4.1 percent — sublime news that all but ensures as many as four benchmark interest rate hikes in 2018, according to monthly Labor Department figures released on Friday.
Jobs in the construction, retail, manufacturing, mining and business services sectors helped propel the biggest employment boost since July 2016 and keeps in motion an 89-month string of gains. Experts had forecasted a gain of just 200,000 jobs for the month.
“The February jobs report was as good as it gets, with the establishment survey showing the largest monthly job gain since July 2016, solid upward revisions for the prior two months, a rebound in the average workweek, and most of all, no runaway wage acceleration,” said Doug Duncan, chief economist at Fannie Mae, in a prepared statement. “Not to be outshined, the household survey reported a massive gain in employment amid a rise in the labor force participation rate, which posted the biggest one-month jump since April 2010.”
National Association of Realtors Chief Economist Lawrence Yun predicted the positive job report would likely influence the Federal Reserve’s decision later this month to raise rates, thus setting in motion an uptick in mortgage rates that could affect housing affordability this year.
Earlier this week, the average rate on 30-year fixed-rate mortgages jumped to 4.46 percent, from 4.43 percent a week earlier, marking the highest average since the beginning of 2014.
“The strong job growth assures at least three interest rates hikes by the Federal Reserve in 2018,” said Yun. “Because of the low unemployment rate, further normalization in monetary policy should be expected in 2019 as well, meaning another three or four rate hikes next year.”
“Mortgage rates will therefore rise and rise,” he said. “That in itself hurts housing affordability. But factors that can help with affordability are more income to households (possibly a second income earner getting a job) and if home prices can finally moderate. For slower home price growth, more home construction is needed. Job openings in the construction industry remain at historic highs. It is now a matter of providing necessary skills to go into the industry.”
The unemployment rate, meanwhile, remained stable at 4.1 percent, the same as in January. The rate is the lowest it’s been since 2001, according to Labor Department statistics.
Wages grew modestly by 0.1 percent, according to the Labor Department figures. Annually, the earnings growth rate slowed to 2.6 percent in February, according to the statistics.
Sotheby's International Realty ® is a registered trademark licensed to Sotheby's International Realty Affiliates, Inc. This Web site is not the official Web site of Sotheby's International Realty, Inc. Sotheby's International Realty, Inc. does not make any warranty regarding any information, including without limitation its accuracy or completeness, contained on this site. Equal Housing Opportunity. Visit Sotheby's International Realty
Design By SantaFeWebDesign.com