Private Payrolls Grow, Used Car Prices Rise, Mortgage Applications Edge Higher
Private Payrolls Grow
More signs of a resilient U.S. job market arrived this week in the form of reports showing private sector employment growing in February from the prior month, including a rise in hiring by small businesses.
Private employers increased hiring by 242,000 jobs and raised annual pay on average by 7.2%, according to a Wednesday report from payroll services provider ADP and Stanford University’s Digital Economy Lab. Analysts noted pay growth is positive for households but may also signal that inflation remains a persistent concern that could spur further monetary policy changes including more Fed interest rate hikes.
“There is a tradeoff in the labor market right now,” ADP Chief Economist Nela Richardson said in a statement. “We’re seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated.” Richardson said while pay increases have been slowing in recent months, the pace on its own is unlikely to help drive down inflation rapidly in the near term.
Also this week, payroll services provider Paychex and consulting firm IHS Markit reported that job growth continued in February for businesses with fewer than 50 workers. The rise was led by companies in the leisure and hospitality industry, which saw jobs increase for the fourth straight month.
“This employment growth and cooling wage inflation in February show small businesses are demonstrating resiliency as they navigate the current economic environment,” Paychex CEO John Gibson said in a statement. “Given the slowing wage increases, employees of small businesses seem to be contending with inflation by increasing their hours worked.”
Used Car Prices Rise
Used vehicle prices soared in the early months of the pandemic as supply chain disruptions made new cars difficult to find, and they are on the upswing again. Data firm Cox Automotive reported this week that used vehicle prices rose 4.3% at the wholesale level in February over January levels, the largest spike between those months since 2009.
Prices on average were still down 7% from a year earlier, but are now going back up at a rate that is traditionally unusual for this time of year and are affecting retail sales, researchers noted. Cox’s Manheim Market Report showed retail sales of used vehicles declined 5% in February from the prior month and were also down 9% from a year earlier.
Preliminary Commerce Department data showed total new and used vehicle sales in February were down 6.2% for the month but increased 8.7% from a year earlier. The National Automobile Dealers Association reported new vehicle sales in February rose 8.6% from a year earlier in February, marking the seventh straight month of year-over-year increases.
Vehicle price hikes are arriving as rates on auto and other consumer loans have been heading up, following a series of Federal Reserve increases in its own key lending rate. Research firm J.D. Power reported the average monthly payment on new vehicles in February was $722, up $59 from a year earlier, with loan rates averaging about 6.8%, for a rise of 252 basis points from February 2022.
Mortgage Applications Edge Higher
Mortgage application volume in the week ended March 3 rose 7.3% from the prior week, despite a continued rise in mortgage rates, the Mortgage Bankers Association reported Wednesday.
The trade group said refinance applications increased 9% from the previous week but were still down 76% from the comparable week of 2022. Purchase applications rose 7% for the week but dropped 42% from a year earlier.
The bankers group noted 30-year, fixed rate mortgages last week averaged 6.79%, the highest since November and 270 basis points higher than a year earlier. “Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week,” Deputy Chief Economist Joel Kan said in a statement.
Many prospective buyers, including apartment renters, are waiting on the sidelines for rates to come back down, Kan and other industry analysts have noted.
Elgin Development Group
Lou Hirsh, CoStar News
- March 09, 2023
Elgin Development Group
A Division of the Elgin Area Chamber
31 S. Grove Avenue, Elgin IL 60120