Chart of the Week
Every Friday, MBA's Chart of the Week provides commentary and analysis on a topic of interest for the industry. This comes from variety of data sources, including proprietary data from MBA's own surveys and studies, as well as from government agencies and other reliable sources of mortgage, housing, and economic data.
MBA Members get complimentary access to the Chart of the Week Archives. Login to access.
Current Chart of the Week
The job market strengthened in December, with payrolls increasing by 256,000 for the month and capping a year of faster-than-expected job gain; the average monthly number of jobs added per month was 186,000. The unemployment rate decreased to 4.1%, and wage growth decreased slightly to 3.9%. The December employment report was a picture of a strong job market. While the FOMC had indicated that they could slow the pace of rate cuts as we enter 2025, these data make at least a pause in cuts much more likely, pushing mortgage rates higher in the near term.
However, as we highlighted in a previous Chart of the Week, the share of workers who were unemployed for longer spells has increased, implying that even though the job market is generally strong, it has been harder for those workers who have lost jobs to regain employment. In another BLS survey, the Job Openings and Labor Turnover Survey (JOLTS), we see that hiring and quits have been declining. Openings did pick up in November but had been trending lower since 2022.
In November, the number of hires was less than 5.3 million, its lowest level in 6 months and at levels last seen in 2016. Since reaching a recent peak of 6.9 million in 2022, the number of hires has drifted lower. The number of quits was just under 3.1 million, which, outside of the 2020 pandemic period, was the lowest since 2018. Quits are an important indicator of labor market health since, in a weaker job market, they tend to decline as workers are less willing to leave their current jobs as they see fewer or less favorable job options available. On the other hand, in a stronger job market, quits tend to increase as workers vacate their positions for better opportunities.
In closing, while the December employment report was one of relative strength, other data points indicate that some potential weakening in the job market is around the corner. Our forecast is for monthly job growth to slow gradually in 2025 and for the unemployment rate to move higher over the course of the year from its current level of 4.1%, potentially reaching 4.5% by 2026.
- Mike Fratantoni ([email protected]), Joel Kan ([email protected])