Hiring is on the rise, but also worse than once thought. What gives?

Real estate didn’t shed an unusual number of workers in August. But there are fewer jobs than it once seemed. Inman explains the paradox.

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Job growth continued to push forward in the summer, but at a slower pace than previously reported.

The U.S. Bureau of Labor Statistics on Friday revealed that the U.S. economy added a seasonally adjusted 187,000 jobs to private non-farm payrolls in the month of August, bringing the total estimate to 156.4 million.

But an increase that large was only possible after the government revised its preliminary estimates downward for each of the previous two months, suggesting that the picture painted beforehand was a bit rosier than the reality at the time.

Still, the latest estimates suggest there were 77,000 more jobs in the U.S. economy than officials thought there were at this time last month, highlighting the nature of a market that continues to add jobs in the face of the Federal Reserve efforts to cool inflation.


Mike Fratantoni | Mortgage Bankers Association

“Payroll employment increased in August, but with the markdowns in the rate of job growth for June and July noted in this report, the cumulative effect is a noticeable slowdown in the job market,” Mortgage Bankers Association Chief Economist Mike Fratantoni said in a statement. “Job gains are now averaging only 150,000 over the past three months. As in prior months, job growth is increasingly concentrated in just a few sectors like hospitality and health care, indicating that the pace of growth could slow much faster if these sectors were to cool down.”

In real estate, the revisions to previous months’ data suggested job growth in this sector was even weaker than it appeared nationwide.

The offices of real estate brokers, agents and property managers dropped 6,300 jobs from payrolls between July and August, which is actually about 1,000 cuts fewer than expected for that time of year. The government refers to this as a small seasonally adjusted increase in real estate jobs.

But at this time last month, the report suggested real estate jobs in July were 10,000 above the new preliminary estimate from August. This means the government now believes its July report overstated the number of people working in real estate by about 3,700.

These types of monthly fluctuations — in which the most recent data is released in preliminary form before undergoing revisions for accuracy in future months — are a normal part of the government’s data-reporting process. 

The overall picture? Hiring in the national economy — and in real estate — is still holding steady, and if anything is still on an upward trajectory on a seasonally adjusted basis. But at the same time, the number of jobs in real estate is lower than it seemed even a few weeks ago.

Residential construction companies — including builders and trade contractors — also posted a small seasonally adjusted net increase of 1,400 jobs from July to August, but that’s after the government adjusted the July estimate downward by about 12,600 jobs.

What does that mean? By the bureau’s best estimate, the job market in residential construction is still improving, not worsening; it just hasn’t looked as good as previous reports appeared to suggest.

Overall, Fratantoni doesn’t see much in this report that leads him to expect the Federal Reserve to break from its current policy of keeping interest rates mostly unchanged before scaling back its anti-inflation fight in early 2024.

“The combination of a still strong job market, and rates that should trend down over time, is positive for the housing market,” Fratantoni added.

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