More workers, rising wages, and rate pause should all benefit the market
The latest US jobs report was in line with current expectations for the economy with 145,000 jobs added in December 2019.
The data from the US Department of Labor also reveals that unemployment rate remained at the 50-year low level of 3.5% while the participation rate also continued higher.
First American Deputy Chief Economist Odeta Kushi told MPA that the steady rise of the labor force participation rate (up 0.6 percentage points from a year earlier) means it is now only 1.7 percentage points below the peak in 1999.
“As this participation rises, competition among employers for workers increases, leading to higher wages,” said Kushi. “That’s good news for potential home buyers in 2020, who will benefit from the affordability boost that comes from increased purchasing power. The relationship between prime-age participation and wage growth just shows that you’ve got to play to get paid.”
Meanwhile, Fannie Mae chief economist Doug Duncan noted some other positives for the housing market.
“Residential construction (including specialty trade contractors) posted a modest increase, and we expect continued gains in residential construction employment going forward. Overall, we believe today’s report is consistent with the Fed’s stance of “pausing” on rate cuts for the foreseeable future,” he said.
