Despite this increase, the unemployment rate rose slightly to 4.0% in January from 3.9% in December. The unemployment rate remains higher than the 3.5% unemployment rate recorded in February 2020, just prior to the Covid-19 pandemic.
“Even with this strong start to the year, 13% of the jobs lost in the pandemic have not been regained,” First American deputy chief economist Odeta Kushi said in a statement. “If monthly gains continue at the January pace, we could return to the pre-COVID employment peak by August 2022.”
The labor force participation rate also rose in January to 62.2%, however it also remains below its pre-pandemic level.
“Labor force participation rate is important because a labor market with low unemployment and low participation means many Americans are not participating in the economy or contributing to its growth,” Kushi said in a statement. “A low unemployment rate and a high participation rate signals a healthy labor market.”
After months of growth, the construction sector lost 5,000 jobs in January from December, due to the loss of 9,500 jobs in heavy and civil engineering construction. As a whole, the construction sector is still 85,000 jobs below its February 2020 level.
On a brighter note, residential construction added 3,600 jobs and the number of residential specialty trade contractor jobs rose by 800.
“Residential building construction employment is up 5.3% compared with pre-COVID, while non-residential building construction employment remains 6.4% below,” Kushi said.
This is good news for homebuilders who have continued to struggle with supply chain issues, rising commodity prices and labor shortages as they try to keep up with demand. With the inventory of existing homes so low, new construction is playing a larger role in the greater housing inventory landscape. According to a recent report by Redfin, 34.1% of single family homes on the market in December were new construction.
“Residential building construction employment increased by 3,600 in January. January’s gain is positive news for home builders and housing supply,” Kushi said. “We need more homes built to relieve the supply-demand imbalance and in such a labor-intensive industry, more hammers means more homes.
The lion’s share of the job market growth in January came from the leisure and hospitality sector (151,000 jobs), the professional and business services sector (86,000 jobs) and the retail trade sector (61,000 jobs).