The labor market is continuing to add jobs and sales of new homes are increasing – both positive indicators that the U.S. economy remains in rebound mode, according to home mortgage provider Freddie Mac. Chartered by Congress back in 1970, Freddie Mac participates in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities for investment and by issuing guaranteed mortgage-related securities
Frank Nothaft, Freddie Mac vp & chief economist, released an economic outlook this week that predicts home sales should strengthen this year, increasing 5% in 2011 vs. 2010 on a calendar-year basis. However, he stressed that comparisons with last year will understate sales growth, because of the impact of the 2010 house-buying tax credit that helped bring many buyers into the market through last April.
“Expect to see a bit of spring in homes sales activity during the second quarter,” Nothaft said. “Sales contract signings for existing homes were up in February, positioning the market for a bounce-up going into the traditional home-buying season.”
That’s good news for trucking, as residential home construction comprised 37% of the industry’s revenue base between 2006 and 2011, according to analysis by research firm FTR Associates.
Freddie Mac’s outlook is also brightened by a continued drop in unemployment figures, though Nothaft noted that jobs are being added unevenly across the country.
The Dept. of Labor recently reported that unemployment declined for the fourth straight month this March to 8.8%, with net employment up by 216,000. That’s the largest monthly job gain since May 2010 and a hopeful signal that the labor market is warming up, Nothaft said. On a March-over-March basis, employment was up by 1.3 million, according to Labor Dept. figures.
Job creation in March, though, took place only in several economic sectors, especially service-providing industries, mining, and manufacturing. In contrast, local government employment was down again, and construction and real estate employment remained weak.
Construction jobs in particular are still largely down, continuing the negative trend seen over the past five years, with total construction employment down nearly 30% from its peak in April 2006, according to Freddie Mac’s analysis.