The recently released September Jobs Report signaled good news for the economy, labor force and consumer buying power, according to First American Deputy Chief Economist Odeta Kushi.
“The unemployment rate fell to a five-decade low, while job growth remained steady, gaining 136,000 jobs in September,” Kushi says. “Wage growth for all production and non-supervisory employees on private non-farm payrolls, a primary driver of household income growth and house-buying power, remained strong with a 3.5% increase compared with a year ago. Add that to low mortgage rates and it’s a good boost for house hunters.”
Kushi notes that much of U.S. economic growth is driven by consumer spending, and people are expected to keep spending given that jobs are plentiful and wages are rising. “The housing market, by many metrics, had one of its best months in August 2019, as it was buoyed by lower mortgage rates, favorable demographics, and the continued growth in wages, which contributes to higher household income and stronger purchasing power.”
The prime-age labor force participation rate, one of the primary indicators for the health of the labor market, is up 0.8 percentage points compared to one year ago, Kushi notes. “This means more jobs and wage growth may be on the way, and is another positive sign for the health of the overall economy.”
However, the prime-age labor force participation must continue to rise for wage growth to continue. “While the prime-age labor force participation rate remains below the 2007 level and the long-run trend, if we see continued growth to 83%, it could push wage growth (for all production and nonsupervisory employees on private nonfarm payrolls) to as high as 3.8%.”