The last post reviewed the relationship between employment and house prices. It was highlighted that the current recovery in employment levels is dominated by a surge in temporary and part time workers. This post will assess the relationship between temporary employment and house prices.
Chart 1 Temps and House Prices
Chart 1 above highlights the volatility of in temporary employment growth. There appears to be a weak relationship between house price appreciation and temporary employment growth. This may indicated that the current recovery in employment, largely due to a growth in temporary employment hire, might provide as small amount of support to house prices. Chart 1 shows that from early 2002 the relationship may have tightened.
Chart 2 Is there a break in Temporary employment series?
Examining the correlations coefficients in the 2 periods in chart 1 and 2 may make it clearer whether there has been in shift in the relationship between temporary employment and house prices. Table 2 shows the weak inverse correlation between temp hire and house price inflation. However, from 2002 until 2010, the relationship between the two series is positive. In addition, the intensity correlation strengthens, indicating the existence of a break in the employment series. Advancing the quarter on quarter change in the employment series by 2 quarters improves the the intensity of correlation to 0.21.
Table 1 Correlation Temp Employment and House Price
Temporary employment share of overall employment has grown recently. However, the relationship with house price growth and temporary employment growth is not significant. It is unlikely that growth in temporary employment will provide impetus in house price growth. Most likely growth in temporary hire helps stem the tide of repossessions/foreclosures.
The upcoming post will analyse the relationship of the earnings with house prices.