Real Estate

Construction a bright spot in weak September jobs report

Unemployment rate drops to 4.8%

Total non-farm employment added a disappointing 194,000 jobs in the month of September, bringing the unemployment rate down to 4.8%, according to the U.S. jobs report released on Friday. This is the ninth consecutive month of net payroll gains, however employment has yet to return to pre-pandemic levels.

After losing 3,000 jobs in August, the construction sector added 22,000 jobs in September. However, construction employment is still 201,000 jobs below its February 2020 level. This growth was also mostly driven by non-residential specialty trade contractors.

“The average hourly earnings of production and non-supervisory employees in construction are up 5.8% on a year-over-year basis in September – that’s the highest growth since 1982,” Odeta Kushi, the First American deputy chief economist said in a statement.

Despite showing very little net change in the number jobs thus far this year, housing starts in August 2021, were still 17.4% higher than a year ago, according to a report by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

“Attract and retain – this labor-intensive industry needs more hammers to build more homes,” Kushi said. “Residential building is up, just over 5% compared with pre-Covid, while non-residential building remains 4.7% below its pre-pandemic level. Attracting skilled labor remains a key priority for construction.”

While job growth does remain slow, experts still believe the Federal Reserve will soon start tapering their asset purchase.

“This will likely lead to modest increases in interest rates, putting additional pressure on housing affordability at a time home-price appreciation is still very high,” Mortgage Bankers Association SVP and chief economist Mike Fratantoni said in a statement.

Based on the August employment report, U.S. jobs were expected to grow by 500,000 in September. This slower pace of hiring could be attributed to many different factors, but many experts feel that the timing of the data collection in mid-September during a surge in COVID-19 cases due to the Delta variant, may have played a role.

Another factor is an unexpected drop in the number of government jobs. Public sector payroll decreased by a net 123,000 positions, local government education jobs fell by 144,000 and state government education roles dropped by 17,000.

Still, other experts are placing some of the blame on a slightly lower labor force participation rate.

“A labor market with low labor force participation means many Americans are not participating in the economy or contributing to its growth,” Kushi said. “As of September, over 3 million workers were still missing from the labor force compared with February 2020.”

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