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Job growth beats expectations in August

However, unemployment rises back above pre-pandemic level

Even in the midst of a housing recession, job growth remains strong. August total nonfarm payroll employment rose by 315,000 jobs from the month prior, according to data released Friday by the Bureau of Labor Statistics.

After this latest job gain, employment is now 240,000 higher than its pre-pandemic level. Despite this gain, the unemployment rate rose by 0.2 percentage points to 3.7%, as the number of unemployed persons rose to 6.0 million. Both metrics are now back above their February 2020 levels after returning to their pre-pandemic levels in July.

“The August jobs report revealed that while the labor market remains quite strong, with employment growth still above a sustainable pace; however, that pace is slowing,” Mike Fratantoni, the chief economist at the Mortgage Bankers Association, said in a statement. “The increase in the unemployment rate largely reflects more workers entering the workforce.”

Construction gained 16,000 jobs in August, with residential building gaining 2,300 jobs and residential specialty trade contractors gaining 8,600 jobs. Heavy and civil engineering construction, meanwhile, lost 2,000 jobs.

“Residential building employment is up 7.7% compared with pre-pandemic levels, while non-residential building employment remains 5% below,” Odeta Kushi, the deputy chief economist at First American, said in a statement. “While builder confidence fell again in August due to the slowing housing market and ongoing supply-side headwinds, multi-family starts were up 17% year over year in July and homeowners who are rate-locked in may choose to remodel instead of move. You need more hammers at work to build and remodel homes.”

The real estate, and rental and leasing services sector gained 5,900 jobs in August, with real estate gaining 2,200 jobs, while renal and leasing services gained 3,800 jobs.

The lion’s share of the job growth in August came from gains in the professional and business services sector (up 68,000 jobs), the health care sector (up 48,000 jobs), and in the retail trade sector (up 44,000 jobs).

“The housing market is reeling from the hit to affordability from the spike in mortgage rates and much higher home prices,” Fratantoni said. “While these data don’t promise any near-term relief on rates, the strong job market will continue to support housing demand as household incomes continue to grow at a brisk pace.”

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