The home building industry was served mixed economic signals today in a series of reports that held a combination of hopeful and dismal signs.
November’s jobs report, released today by the Bureau of Labor Statistics, surpassed economists’ expectations with a 146,000 rise in payrolls, and a drop in unemployment to 7.7%. The report was particularly bright for 25- to 34-year-olds, which as Trulia economist Jed Kolko pointed out, are of “prime age for housing demand.” Among that age group, 75.2% held jobs in November, and the unemployment rates was 7.9%, the lowest seen in nearly four years.
Job growth also was promising in what Trulia considers “clobbered metros,” defined as the areas that experienced the steepest home price declines during the bust and have the highest current vacancy rates. In those areas, job growth picked up to an annualized rate of 0.9% through October, though still stood behind the national average of 1.4% for the period.
However, the good news in employment did not extend to the construction industry, where employment fell by 20,000 jobs in November, and the industry’s unemployment rate grew to 12.2%. Residential building contractors lost 6,800 workers during the month, while residential specialty contractors gained 3,200 new workers. Residential contractor jobs contracted by 3,600.
According to a survey by the Associated General Contractors of America, a significant portion of the blame rested on the threat of the country going over the fiscal cliff in January. Of the 551 construction firms surveyed, 67% said they were postponing hiring for fear of what going over the fiscal cliff might mean for their businesses, 65% reported delaying or cancelling capital expenditures, and 32% reported having already laid off workers.
Fiscal cliff fears also were evident in the mid-December Reuters/University of Michigan Consumer Sentiment index, released today. The index fell by 8.2 points to reach the lowest reading since last year.
“Slowly, but surely, consumers are starting to become more aware of the so called ‘fiscal cliff’ and its implications,” wrote Leslie Levesque, senior economist at IHS Global Insight. “It was a matter of time before the thought of higher taxes crept into consumers’ outlook. This alters perceptions of future financial situations, job prospects, and the health of the economic recovery.”
However, those fears mainly focused on the future. The current conditions index held nearly steady with only a 0.8% drop to a reading of 89.9, while the outlook index fell 13 points to a reading of 64.6.
Whether those fears will be realized has yet to be seen.
Claire Easley is a senior editor at Builder.