Job Growth Disappoints, but Multifamily Performance Remains Steady - RAOT Week of Nov 3rd 2024

This is a weekly narration of our Rent and Operating Trends Report

U.S. Job Growth Slowed Significantly in October
Based on last week’s report from the Bureau of Labor Statistics (BLS), the U.S. labor market added 12,000 jobs in October. It was the lowest monthly total since December 2020, but sluggish growth was expected due to some special circumstances.
Impacts from the hurricanes, a strike by Boeing workers, and a shorter collection period of employer data all contributed to the lower reading. There is a chance November shows a bounce back as those trends normalize.
The other pessimistic note in the report is that job gains for the prior two months were revised down by a combined 112,000 jobs.
Interestingly, ADP’s estimate of job gain was incredibly strong at 233,000 for October.
 
The Overall Economy Remains Very Strong
While last week’s labor market report was subpar, the Bureau of Economic Analysis reported GDP growth of 2.8% for the third quarter. While the rate was slightly below last quarter’s growth of 3.0%, it still suggests the economy is robust.
The number was boosted by consumer spending, exports, and federal government spending. A decrease in housing investment was partially to blame for GDP underperforming the prior quarter’s growth.
 
Will the Fed Cut Rates Again this Week?
It is widely expected that the Fed will cut interest rates by 25 basis points on Thursday. Annual growth for the all-items consumer price index slowed to 2.4% in September, the lowest in more than three years, and it was similar to inflation before the pandemic.
Lower interest rates can help keep consumer spending at a strong rate and allow businesses to invest more in hiring and equipment upgrades.
If the Fed does not lower interest rates this week, the committee will have another opportunity before the end of the year. Its next regularly scheduled meeting is on December 17-18.
 
Multifamily Highlights
Operational metrics barely budged from the prior week, which is a good sign during a seasonally slow period. That is especially true for metrics like occupancy rate and traffic which have been at their lowest levels in the past few years. In addition to the amount of supply being delivered, slower job growth has likely weighed on performance as well.
Rent growth did not experience as big of a decline in October this year compared to 2023. At the national level, effective rents declined 46 basis points in October this year compared to a 133 point drop last year. On an annual basis, rents are still down 0.2% from a year ago, but that metric is poised to turn positive.

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