What happened in the July employment report?
Mixed signals on the state of the economy continue as companies added an impressive 528,000 net new jobs in July in the wake of the announcement last week GDP declined over the first two quarters of 2022. July’s job growth far surpassed the second quarter average of just under 375,000 jobs added month to month. Although recession fears have permeated the national conversation, the total number of nonfarm-employed persons has reached 152.5 million, back to the pre-pandemic peak from February 2020. While rampant inflation and relative softness in the stock market over the calendar year have Americans concerned about their spending and savings, the economy continues to exhibit a strong pace of employment activity.
The number of job openings has held steady, at around 11 million in the most recent releases of data, and the number of unemployed persons has as well, around 5.9 million. Opportunities are plenty, and the headline unemployment rate decreased to 3.5% as the labor force participation rate held steady at 62.1%, still below the pre-pandemic level of 63.4%. The job market continues to favor workers who are open to negotiating pay raises or seeking new positions, and average hourly wages ticked up by 15 cents to $32.27. Although this is a promising development for workers; 9.1% inflation means that the modest 5.2% year-over-year wage growth still leaves workers with a significant loss of purchasing power.
July employment gains were led by hires in professional and business services, leisure and hospitality, and health care – consistent with recent trends. This month saw no change to the share of employees working remotely specifically because of the pandemic, maintaining at 7.1%. After increasing in June, July saw slightly more employees report that they were unable to work because their employer closed down because of the pandemic, up to 2.2 million in July compared to 2.1 million last month. July saw another improvement in terms of the pandemic’s effect on employment, as the number of people who are not in the labor force and were unable to look for work because of the pandemic fell from 610,000 to 548,000.
What does today’s data mean for homebuyers and sellers and the housing market?
With rent growing at double-digit paces year-over-year every month since August 2021, mortgage rates near or above 5% since April, and the asking price of homes for sale at an all time high, the cost of housing is a major challenge for Americans today. It’s no coincidence that more affordable metros are the focus of ours Emerging Housing Markets Index, as well as those with the ability to work remotely or take new jobs elsewhere are targeting places that can ease their cost of living. With wage growth lagging expenses, renters and prospective homebuyers absolutely must stick to their budget when searching for a new place to live. Tools like Realtor.com’s Rent or Buy and Affordability Calculators can help make those tough decisions easier, and pursuing wage increases or higher-paying new jobs during this still-hot labor market can expand the set of choices that fall within budget.
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