BLS Jobs Report – Crestone Take
The Bureau of Labor Statistics released the December Jobs Report, showing just 50,000 jobs created. On top of that, prior months were revised meaningfully lower. November was revised down from 64,000 to 56,000 jobs (with one more revision still to come), and October was revised further into negative territory—from -105,000 to -173,000. In other words, job growth continues to weaken.
Importantly, all of December’s job gains came from just two sectors:
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Health Care & Social Assistance: +39,000
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Leisure & Hospitality: +47,000
Health Care jobs are largely non-cyclical and not sensitive to economic conditions, while Leisure & Hospitality typically sees a seasonal bump in December due to holiday travel. Excluding these two categories, job growth would have been negative again.
The Jobs Report consists of two surveys:
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The Business Survey, which produces the headline job creation number
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The Household Survey, which determines the unemployment rate
While the headline job number was weak, the drop in the unemployment rate muted the market’s reaction.
The Household Survey showed 232,000 jobs added in December, but this data is extremely volatile. Over the last 11 months, total job growth in this survey has been just 57,000 jobs, or roughly 5,000 per month. The labor force declined by 46,000, and together these factors pushed the unemployment rate down from 4.5% to 4.4%. November was also revised lower, from 4.6% to 4.5%.
The broader U-6 unemployment rate, which captures underemployment, fell from 8.7% (the highest level in eight years) to 8.4%.
Adding to the frustration, the BLS acknowledged that in three separate months this year, the unemployment rate was understated by 0.1%. Those errors hurt mortgage bonds and kept rates higher than they otherwise would have been. While revisions like this could happen again, unfortunately they don’t help after the fact.
Housing Starts, Permits & Builder Confidence
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Housing Permits: Down 0.2% to an annualized 1.41M; down 1.1% year over year
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Housing Starts: Down 4.6% to 1.25M; down 7.8% year over year
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Housing Completions: Up 1.1% to 1.39M, but still down 15.3% year over year
Bottom line: Builders are pulling back and limiting new supply. If rates fall as we expect, demand will increase—but builders can’t instantly respond. Supply takes time.
That imbalance creates opportunity. Buyers who act before rates fall further may benefit, because when demand outpaces supply, home values rise.