|
Employment/Permit
Ratio
|
|
|
|
 |
| MOST RECENT STATISTIC: |
(0.03) |
|
|
| GRADE: |
F |
|
|
| PERIOD COVERED: |
July 2010 |
|
|
| Date Released: |
8/06/10 |
|
|
| Next Release: |
9/03/10 |
|
|
|
|
|
July-10 |
June-10 |
May-10 |
July-09 |
July-08 |
|
| 12-Mo. Employment
Growth (000) |
(17) |
(180) |
(467) |
(7,079) |
(360) |
| 12-Mo. Total Permits
(000) |
565 |
583 |
574 |
587 |
921 |
| Employment/Permit
Ratio |
(0.03) |
(0.31) |
(0.81) |
(12.06) |
(0.39) |
|
| Source:
Hanley Wood Market Intelligence |
Analysis for the Housing Market
By:Jonas Adams
Our Employment/Permit Ratio increased sharply in July to (0.03). Job growth over the last twelve months was down 17,000 jobs, a 0.01% drop from last July. On the supply side, construction figures show that approximately 565,000 new homes have been permitted for construction, plus approximately an additional 50,000 manufactured housing units.
Based on the current trend we expect to see our Employment/Permit Ratio to return to positive territory next month. This will be the first time the Employment/Permit Ratio has been in positive territory since the end of 2007.
The current ratio is well below the equilibrium point of 1.08 (total employment over total housing units). The E/P ratio is a representation of employment growth compared to permit issuance, other demand factors, such as low mortgage rates, are not represented. The current reading of the E/P ratio is at the lowest level ever recorded.
Definitions and Importance for the Housing Market
By:Jonas Adams
The Employment/Permit ratio is the ratio of employment gain over a 12-month period to total building permits over the same period. This ratio is particular effective at the metropolitan level because employment gain and permits are statistics that are readily available.
This ratio is a commonly accepted ratio for measuring the housing market's demand/supply balance. The E/P ratio should be compared to the area's overall Employment / Household. This comparison is made in our Demand / Supply ratio, which is available on our website, www.meyersgroup.com. Current and projected E/P and Demand / Supply ratios at the metropolitan level are made in our Market Snapshot reports. The information needed to calculate the current ratios for the top 75 markets in the country is available in our U.S. Housing Markets publication. These publications are all available for purchase at www.hwmarketintelligence.com.
When employment growth turns negative, this ratio must be interpreted in a different manner. A decline in permit levels (a positive in times of negative job growth) will only cause our ratio to drop further into negative territory, while an increase in permit levels (a negative in times of negative job growth) will cause the indicator to move back toward a ratio of 0.0. In essence, a reverse reading of the indicator is necessary while employment growth remains negative.
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