Following a strong showing in October, a somewhat disappointing U.S. jobs report released Friday shows that 210,000 non-farm jobs were added in November, bringing the unemployment rate down to 4.2%. While this is a 0.4% decrease in unemployment, the rate is still above the 3.5% unemployment rate recorded in February 2020, just prior to the Covid-19 pandemic.
The construction sector added a total of 31,000 jobs in November, on par with the two prior months. Specialty contractors showed the largest gains with an increase of 13,000 jobs, while persons employed in construction of buildings, and civil and heavy engineering rose by 10,000 and 8,000 jobs, respectively.
“It was a strong month for construction,” First American deputy chief economist Odeta Kushi said in a statement. “We need more homes and in such a labor-intensive industry, you need more workers to build more homes.”
Of the 10,000 construction of buildings jobs created in November, 4,100 were in the residential sector. In the specialty trade contractor jobs sector, 6,200 were in residential construction. Despite these gains, the construction sector is still 115,000 jobs below its February 2020 level.
“Job growth increased 0.5% for residential construction building, a faster pace than previous months,” Kushi said. “Residential building is up approximately 5.8% compared with pre-COVID levels, while non-residential remains 3.3% below. Attracting skilled labor remains a key priority for the construction industry.”
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With housing inventory reaching a new all-time low the week ending November 28, according to a Redfin report, an increase in new homes, would clearly be welcome.
The lion’s share of the month’s employment growth came in the professional and business services (90,000 jobs), and transportation and warehousing (50,000 jobs), sectors. Transportation and warehousing now had 210,000 more jobs than its pre-pandemic level.
After gaining 164,000 jobs in October, the leisure and hospitality sector posted an increase of only 23,000 jobs in November and it still remains to be seen how the emergence of the Omicron variant will impact this sector.
“While it’s too soon to tell what impact the Omicron variant will ultimately have on the recovery, another wave of COVID-19 infections may further slow the return of workers to the labor market,” Kushi said. “Indeed, the sector that faces the largest jobs shortfall compared with pre-pandemic levels – leisure and hospitality – is most dependent on controlling the virus.”
Federal Reserve Chair Jerome Powell this week signaled that the central bank would end the Fed’s bond-buying program sooner than expected to combat rising inflation.
The Fed has been buying $120 billion in government-backed securities – including $40 billion in RMBS – every month since the beginning of the pandemic. Last month, Fed officials said those purchases would slow by $15 billion a month. The program had been expected to end in mid-2022.
“At this point, the economy is very strong, and inflationary pressures are high,” Powell said on Tuesday. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at our November meeting, perhaps a few months sooner.”
