Eye On Housing
In July, U.S. job growth experienced a solid gain. Total payroll employment rose by 943,000 and the unemployment rate dropped sharply to 5.4%. The July data shows additional growth momentum at the beginning of the second half of the year. In the coming months, the surge of the Delta variant could affect the labor market as Covid-19 restrictions tighten to reduce the spread of the Delta variant. Additionally, the decline of the unemployment rate is another data point for the Fed to consider with respect to an eventual taper.
Both residential construction (+8,300) and nonresidential construction (+2,900) showed modest gains in July. Currently, residential construction employment exceeds its level in February 2020, while only 56% of nonresidential construction jobs lost in March and April have been recovered. Aggregate construction industry (both residential and non-residential) employment totaled 7.4 million in July.
In July, total nonfarm payroll employment increased by 943,000, reported in the Employment Situation Summary. It is the largest monthly gain since August 2020. The previous two months’ gains were also revised higher. The May increase was revised up by 31,000, while the June increase was revised up by 88,000 from 850,000 to 938,000.
The economy lost 22.4 million jobs in the two months of 2020 (March and April) due to the impact of the COVID-19 pandemic. During the first seven months of 2021, 4.3 million jobs have been created. Total nonfarm employment in July 2021 is still 5.7 million lower than its February 2020 level.
Meanwhile, the unemployment rate declined by 0.5 percentage point to 5.4% in July. It was 9.4 percentage points lower than its recent high of 14.8% in April 2020 and 1.9 percentage points higher than the rate in February 2020. The July decrease in the unemployment rate reflected the decrease in the number of persons unemployed (-782,000) and the increase in the number of persons employed (1,043,000). Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already with a job, rose to 61.7% in July.
In July, leisure and hospitality industry, which was hit hard by COVID-19 lockdowns last year, added 380,000 jobs. Two-thirds of these job gain was in food services and drinking places (+253,000). Employment in professional and business services rose by 60,000 in July. These job gains indicated strong labor demand in labor-intensive service industry as industry recovery continues. Notably, employment in local government education rose by 221,000 in July. BLS explained that “staffing fluctuations in education due to the pandemic have distorted the normal seasonal buildup and layoff patterns, likely contributing to the job gains in July.”
Employment in the overall construction sector increased by 11,000 in July, following a revised decrease of 5,000 jobs in June. Over the month, nonresidential construction employment rose by 2,900, while residential construction added 8,300 jobs.
Residential construction employment now stands at 3.0 million in July, broken down as 883,000 builders and 2.2 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 7,250 a month. Over the last 12 months, home builders and remodelers added 171,700 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,057,300 positions.
In July, the unemployment rate for construction workers declined by 0.6 percentage point to 7.3% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.1% in April 2020 due to the impact of the COVID-19 pandemic.
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