Economy Watch: Another Strong Jobs Report to Round Out 2014
The U.S. economy gained 252,000 jobs in December, representing another healthy month of job growth, according to the Bureau of Labor Statistics.
By Dees Stribling, Contributing Editor
The U.S. economy gained 252,000 jobs in December, representing another healthy month of job growth, according to the Bureau of Labor Statistics on Friday. Hiring was widespread, with gains in professional and business services, construction, food services and drinking places, health care and manufacturing.
The unemployment rate dropped as well, down 0.2 percentage points to 5.6 percent in December, and the number of unemployed persons declined by 383,000 to 8.7 million. Compared with December 2013, the unemployment rate and the number of unemployed people were down by 1.1 percentage points and 1.7 million, respectively.
A larger employment pool also spurs household formation—it took years before some under-30s were finally about to get the jobs they need for their own places, but now they’re doing it. More jobs also means more office leasing, though each employee tends to be allocated fewer square feet than they used to be.
The strength of the report also meant that the impact of low oil prices isn’t being felt in full force in the parts of the country that are dependent on that industry. That might, in time, cut into CRE activity in places such as Houston and Tulsa (and maybe the Dakotas won’t enjoy the lowest unemployment rates among the states this time next year). Low oil prices will likely create a net increase in jobs as Americans spend more.
Ahead of the employment report, the U.S. Department of Labor reported that for the week ending January 3, initial unemployment claims came in at 294,000, a decrease of 4,000 from the previous week. The four-week moving average was 290,500, a decrease of 250 from the previous week’s unrevised average of 290,750. This metric has also been healthy in recent months.
Bane of negative equity shrinking away
CoreLogic reported on Thursday that nearly 273,000 U.S. residential mortgages returned to positive equity in the third quarter of 2014, bringing the total number of mortgaged properties with equity to about 44.6 million, or roughly 90 percent of all of them. Nationwide, borrower equity increased year-over-year by about $800 billion in Q3 2014.
That’s a positive trend, since negative equity has been a pox on the economy—with ripple effects on various kinds of real estate—for some years now. Retail has probably suffered the most, since people mired in negative equity are much less likely to fill their houses with consumer goods.
The problem is still around, however. CoreLogic also said that about 5.1 million properties, or 10.3 percent of the total with a mortgage, were still in negative equity as of Q3 2014. That’s better than a year ago (13.3 percent, or 6.5 million homes), but still historically high.
“Declines were concentrated in a handful of states, such as Nevada, Georgia, Michigan and Florida,” Sam Khater, deputy chief economist for CoreLogic, notes. “Forecasted house price appreciation of about 5 percent over the next year suggests that negative equity should be at about 8 percent a year from now, still above average, but approaching the pre-crisis level.”
Also ahead of the jobs numbers, optimistic investors drove markets up considerably. The Dow Jones Industrial Average gained 323.35 points, or 1.84 percent, while the S&P 500 and the Nasdaq gained 1.79 percent and 1.84 percent, respectively.