More than 200,000 people were added to nonfarm payrolls and hourly wages ticked up slightly in June, according to the Department of Labor jobs report for the month.
While the news is encouraging, recent statistics suggest that these gains will have a hard time translating into home purchases.
The 224,000 nonfarm payroll jobs exceeded the 165,000 expectation, which was based on May’s 72,000 gain after revised numbers. Though hires were up, the unemployment rate increased to 3.7 percent for June. Forecasts suggested unemployment would remain at 3.5 percent.
The lower expectations in part were based on the 75,000 job growth in May, which the Labor Department revised to 72,000. It also reduced April's numbers from 224,000 to 216,000.
What Industries Are Hiring?
With 51,000 jobs added, professional and businesses services had the strongest month-to-month numbers. Health care had 35,000, transportation and housing netted 24,000 and construction was up by 21,000 jobs. Manufacturing employment increased 17,000 after four months of little change.
Other major industries such as mining, wholesale trade, retail trade, information, financial activities, leisure and hospitality, and government had little change from May to June.
Within the construction category, specialty trade contractors had the largest gains by adding 4,700 jobs.
Pay On The Rise, But ...
The average hourly rate for private nonfarm workers increased 6 cents to $27.90 after a 9-cent gain in May. The June increase marks a 3.1 percent 12-month rise.
Despite gains in nonfarm employment and pay, affording a home remains a problem for many.
Home prices continue to outpace wage gains, according to an ATTOM Data Solutions report released at the end of June. ATTOM found that through the second quarter, “median home prices in the second quarter of 2019 were not affordable for average wage earners,” in 74 percent of counties analyzed.
ATTOM also found that 67 percent of markets required potential homebuyers to dedicate more than 30 percent of their wages to purchase a house.
The average hourly pay increases reported in the June jobs report represent approximately $49,900 for nonfarm employees working an average of 34.4 hours per week. In manufacturing, the pay is better, at $59,000 for 40.4 hours per week.
Though average pay is higher, take Washington D.C., for example, where the median salary is $82,377, but the recommended yearly earnings needed to purchase a home is $91,334.
What the experts are saying
“Today’s jobs report shows the U.S. economy continues to create jobs at a strong pace even as we enter the longest period of economic expansion on record,” said Tony Bedikian, managing director and head of global markets at Citizens Bank, in articles with the USA Today and CNBC. “The bounce back in the June jobs number may splash cold water on the notion of an imminent Fed rate cut. We will have to see whether the equity markets can shrug that off when balanced against other macroeconomic factors, such as the hope of a China trade truce.”
“There’s lots of talk about uncertainty, and maybe that’s going to lend itself to a weakening in hiring, but we haven’t actually seen it happen yet,” said Michelle Meyer, chief economist at Bank of America Merrill Lynch, in a New York Times interview.
“The jobs report showed the economy slowing but not faltering. That’s important because one of the questions going into the jobs report was what it meant for the possibility of the Fed cutting rates at the end of the month. They still may do a quarter-point cut as an insurance move, but this certainly says the data aren’t weakening quickly,” Kate Warne, investment strategist at Edward Jones in St. Louis, told Reuters. “If there was a concern in the jobs report, it was the uptick in the unemployment rate, but we’d need to see several months of that, rather than one month. We saw the participation rate rise, which is a big piece of why the unemployment rate rose.”