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Th e M Rep o RT | 47 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ANALYTICS the latest Job growth Wanes in July But more people resumed looking for work. U .S. payrolls grew less than expected in July, a potential sign that the labor market recovery might be cooling down after an early summer hiring spike. According to the Department of Labor, the economy added 209,000 jobs in July, coming in under the 233,000 predicted by economists. The national unem- ployment rate ticked up from 6.1 percent to 6.2 percent. While weaker than antici- pated, July's payroll figures mark the sixth consecutive month that employment has grown by at least 200,000, the longest streak since 1997. Meanwhile, payrolls for May and June were revised to reflect slightly stronger growth, coming up to increases of 229,000 and 298,000, respectively. The biggest gains in July were seen in professional and business services (+47,000 jobs), manufacturing (+28,000), retail trade (+27,000), and construction (+22,000). As of July, nearly 9.7 million people in the United States were counted as unemployed, an in- crease of 200,000 from June. The change reflects a surge in people returning to the labor market, which brought the labor partici- pation rate up to 62.9 percent. In less encouraging news: Out of those Americans who are unemployed, nearly a third have been jobless for more than 27 weeks. At the same time, about 7.5 million Americans are employed part-time for economic reasons (such as having their hours cut back), while an ad- ditional 2.2 million are "margin- ally attached," meaning they're not in the labor force but have looked for a job sometime in the last year. About a third of that group are classified as "discour- aged"—not currently looking for work because they believe there is nothing for them. The July report was released during a big week in eco- nomic news; the Commerce Department reported annualized GDP growth of 4.0 percent in the second quarter, a sharp turn from the 2.1 percent contraction reported in the first quarter. While the Q2 estimate is likely to come down in future revi- sions, analysts still took it as a sign of a reversal of momentum for the economy. On the same day, the Federal Reserve announced plans to con- tinue tapering its monthly asset purchases, keeping its policy on track to close by the end of 2014. Though the latest data indi- cates there's still some slack in the labor market, analysts see little reason for the Fed to veer from its current path. "[T]here is nothing here that changes our view that the Fed will begin to raise rates in March next year, a little earlier than most expect," said Paul Ashworth, chief U.S. economist for Capital Economics. Among other indicators: The average workweek for all em- ployees on nonfarm payrolls was 34.5 hours, unchanged for the fifth straight month. Meanwhile, average hourly earnings just barely inched up to $24.45. Dr. Stan Humphries said there are other influences at work. "Because of its huge size and great diversity of housing preferences and opinions, the Millennial generation will have enormous influence in coming years, especially as they hold off on getting married and having children, the two biggest reasons for first-time home purchases," Humphries said. "But while the age of first- time homebuyers may rise, it is dangerous to assume Millennials don't want to buy at all," he added, pointing to research done by the company that suggests millions of renters—millennials included—want to purchase a home soon, despite obstacles that might delay them. In the meantime, a declining homeownership rate could create larger problems, "keeping rents high and potentially impacting the broader economy if substan- tially fewer people pay prop- erty taxes and buy fewer home goods," Humphries said. The survey also polled panel- ists on their home-value expecta- tions, with most agreeing that U.S. median home values will end this year at an estimated $177,895, a 4.6-percent increase from 2013. That pace is expected to slow in each of the next four years, with values exceeding peak levels by the end of 2017. According to Zillow, the most optimistic group of panelists antici- pate a 5.6-percent annual increase in home values in 2014, while the most pessimistic predicted an aver- age increase of 3.7 percent. "The dispersion of the experts' home value projections has diminished to the lowest level in the history of this survey, and for the second consecutive quarter, the expected five-year average annual growth rate in U.S. home values is the same as that experienced during the pre-bubble era," said Terry Loebs, founder of Pulsenomics. "Although one would expect to observe trends like this in a calming housing market, it's way too soon to conclude that the market has healed and returned to the old normal."