September unemployment fell to 3.7%, the lowest level in the 2000’s era. at under 4% in August. Yet, overall participation rate continues to hover around 63%. Labor supply problems continue and 18% of prime aged workers (ages 25-54), nearly 23 million, are still not entering the work force.
Construction unemployment ticked up to 4.1% as the housing market is losing some strength. Labor challenges continue to plague the construction industry and will persist through the near term as the mix of labor available does not meet with the mix of labor needed.
Our outlook is for durable sectors to slow their rates of growth as housing weakens, supply factors continue to drag on growth and pricing pressures hold back potential.
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Overall unemployment dropped to 3.7% – lowest rate seen in the 2000’s. Commodity prices increasing, labor supply issues continue unabated, tariffs doing what they do – raise prices. Durable manufacturing, housing, consumer-related goods all are being impacted. Our outlook shows unemployment will hold at this rate and start to inch back up in early 2019.
Unemployment creeped up to 4.1% in September. Pricing issues for new and existing homes, as well as upward pressures on inputs and labor start to increase their drag on growth. 2018 will finish well above 2017, but the double whammy of increasing rates and inflation will keep the trajectory lower in 2019.
All signs indicate FED will raise rates again before the year’s out. Inflationary pressures are significant throughout sectors of the economy, but many of them are self-inflicted by regulatory/tariff dictates.
The very high probability the FED will raise rates again will lead to further deceleration in the housing market and other sectors.
Despite rising prices and other issues related to housing, consumer and builder sentiment are at some of their highest points since 2000. Builders continue to tell us this past year is the best they have ever had, even better than the mid-2000’s and in some areas, they are saying it’s at an unsustainable pace of growth.