The unemployment rate unexpectedly dipped below 10 percent in January, to 9.7 percent, according to the Labor Department. And stock markets rallied on the news.
A jobless rate below 10 percent is certainly good for morale -- and for real estate. But hold the bubbly: the unemployment figure fell because fewer people are filing for unemployment benefits, not necessarily because lots more people have found jobs.
Look closely and you'll see that the number of unemployed and the number jobs available for them has been treading water in recent weeks -- neither is getting much better or much worse.
Jobs numbers have important implications for real estate. Homebuilders, for example, are obsessed with the number of jobs in their markets and whether that number is growing or shrinking, because that helps them know whether a new home will sell or stand empty. Unemployment is also significant, because homeowners who have lost their jobs are more likely to lose their homes through foreclosure.
A separate payroll report released Friday by The Bureau of Labor Statistics suggested that we're not out of the woods yet. Payrolls (not including farm workers) fell by 20,000 in January. That's not a big drop. The Bureau characterized the total number of people on the payroll in January "essentially unchanged," as more than 100,000 new temp, retail and government jobs filled most of the void left by more than 100,000 lost construction, transportation, and warehouse jobs. But the BLS upped its estimate of jobs lost in December to 150,000 from the previous estimate of 85,000 losses.
The number of new unemployment claims continues to wobble close to the rate that economists call equilibrium -- that's a seasonally adjusted rate of 450,000 initial claims a week. The seasonally adjusted rate hit 480,000 for the week ending January 30, according to the Dept. of Labor.
That's up 8,000 from the week before, depressing journalists across the Web. But the important thing is the long term trend. Overall, the seasonally adjusted rate of initial claims has been falling towards equilibrium for almost a year -- from more than 650,000 in March to less than 550,000 in September to just under 500,000 by December, according to the Dept. of Labor.