The Commerce Department has released the jobs numbers for October, and according to the October jobs report, the economy added 214,000 jobs during the month. This caused the unemployment rate to drop from 5.9 percent to 5.8 percent. This is important for the senior housing industry because job growth translates into more people with income to spend on goods and services, including senior housing services. The pace of job growth is also one of the factors that the Federal Reserve considers when it deliberates monetary policy. When job growth is low, the Fed is encouraged to stimulate it by lowering interest rates. Conversely, when job growth is high, the Fed might raise interest rates because the stimulus that low rates provide is no longer necessary. The Federal Reserve’s Open Market Committee recently voted to keep rates at their current near-zero level for now, but most Fed watchers expect the central bank to raise them by the middle of next year. Before the Fed raises interest rates, senior housing providers and investors who are seeking capital to finance wealth generating transactions should contact the Chicago-based firm Cambridge Realty Capital to learn more about the different financing optionsthat it offers for acquisitions, sale/leasebacks, joint ventures, and other purposes as well.
Details from the Jobs Report
In addition to the economy creating 214,000 jobs in October, the job gains for August and September were also revised upwards by 31,000. This boosted the average number of jobs created for the last six months to 235,000. In October, the industry that had the most gains was the leisure and hospitality industry, which created 52,000 new jobs. This was followed by the restaurant and bar industry, which added 42,000 new jobs; professional and business services, which added 37,000 new jobs; healthcare and retail each added 27,000 new jobs; the manufacturing sector added 15,000 new jobs; and the construction industry rounded out the field by adding 12,000 new jobs.
In other good news, October marked the 49th consecutive month of job growth, and the labor participation rate also ticked up to 62.8 percent. These figures undoubtedly pleased members of the Federal Reserve, who can point to them to validate their decision to end the Fed’s bond buying program last month. However, it was not all good news from the report, and the Fed can also point to some of the disappointing data on wages to validate its decision to keep its benchmark federal funds rate at near-zero for now.
According to the jobs report, hourly earnings increased by only three cents last month, from $24.54 to $24.57, and are up by just two-percent during the past year. This slow wage growth is constraining consumer spending and keeping the economy from growing at a faster pace. It is also one of the reasons that the Fed has continued its loose monetary policy and kept interest rates at near-zero for the past six years. However, despite the disappointing wage information from the report, most analysts found the jobs report to be positive, and they expect the economy to create more jobs in November and December as well.