Last month brought the good news that companies added over 200,000 workers to their employment rolls; this is the third time in four months that new jobs have exceeded that mark. Moreover, as we can appreciate in the chart below, employment growth has been very robust since the beginning of the year, with the notable exception of March that brought only 50,000 additional jobs.
The vast majority of jobs added last month originated in the private sector, which is the area of the economy that creates wealth.
Year-to-date through July, employment in the private sector has increased by 1.23 million workers, virtually the same as last year, although year-to-date, new jobs this year are ahead of last year’s by 18,000 workers.
Another important aspect of the nation’s employment picture is the unemployment rate, which dropped to 4.3% in July. This is the lowest it’s been since the turn of the century and it implies that businesses will continue to have a difficult time filling jobs. Also, the low unemployment rate may put upward pressure on salaries and wages.
Closer to our industries, we found that the number of employees in remodeling firms rose in June by 0.3%, or 1,100 workers. Although it is a small gain, it’s well received since it is the first time in four months that remodeling firms are hiring more workers.
We should note, however, that the increase in the number of workers may be partially offset by a decline in the average number of weekly hours that remodeling workers put in. In fact, in the month of June they clocked an average of 35.9 weekly hours, half an hour per week less than the previous month. In other words, the number of hours fell by 1.3%.
For the same month of June, we find that homeowner households were on pace for spending at the annual rate of $180.9 billion for home remodeling. This is exactly the same rate maintained the previous month. Although slightly less than the rate of the previous three months, expenditures in June were 12.8% above June of last year. Despite the setback over the last few months, consumers are spending 11% more this year than last year’s homeowner spending of $163.6 billion.
Note that the remodeling expenditures data depicted in the chart above excludes spending for rental or seasonal (i.e. vacation homes, time share homes) properties.
And mortgage rates remained relatively unchanged last week. They rose minimally by just one basis point; i.e., one-hundredth of a percentage point. Rising mortgage rates, which are typically a huge impediment on housing purchases or remodeling, do not seem to be a concern on the near-term horizon.
Manuel Gutierrez, Consulting Economist to NKBA
Explanation of NKBA’s Economic Indicators Dashboard
The dashboard displays the latest value of each economic indicator with a colored triangle that highlights visually the recent trend for each of the drivers. “Green” is a positive signal indicating that the latest value is improving; “Yellow,” as it’s commonly understood denotes caution because the variable might be changing direction; and “Red” indicates that the variable in question is declining, both in its current value and in relation to the recent past.
Note that all the data, except for “mortgage rate” and “appliance store sales” are seasonally adjusted and are represented at annual rates.
Remodeling Expenditures. This is the amount of money spent on home improvement projects during the month in question. It covers all work done for privately owned homes (excludes rentals, etc.). The data are in billions of dollars and are issued monthly by the U.S. Department of Commerce.
Single Family Starts. It is the number of single family houses for which construction was started in the given month. The data are in thousands of houses and are issued monthly by the U.S. Department of Commerce.
Existing Home Sales. These data are issued monthly by the National Association of Realtors, and capture the number of existing homes that were sold in the previous month.
High-End Home Sales. This series are sales of new homes priced at $750,000 and over. The data are released quarterly by the U.S. Department of Commerce, and are not seasonally adjusted. Thus a valid comparison is made to the same quarter of the prior year.
Mortgage Rate. We have chosen the rate on 30-year conventional loans that is issued by the Federal Home Loan Mortgage Corporation (known popularly as Freddie Mac.) Although there are a large number of mortgage instruments available to consumers, this one is still the most commonly used.
Employees in Residential Remodeling. This indicator denotes the number of individuals employed in construction firms that do mostly residential remodeling work.
Building Materials Sales. These data, released monthly by the Department of Commerce, capture the total sales of building materials, regardless of whether consumers or contractors purchased them. However, we should caution that the data also includes sales to projects other than residential houses.
Appliance Store Sales. This driver captures the monthly sales of stores that sell mostly household appliances; the data are stated at an annual rate. We should not confuse this driver with total appliance sales, since they are sold by other types of stores such as Home Centers, for instance.
We hope that you find this dashboard useful as a general guide to the state of our industry. Please contact us if you would like to see further detail.
