After mixed results in January, the U.S. jobs report released Friday shows that 678,000 non-farm payroll jobs were added in February, and the return of skilled labor in residential construction is reason alone for optimism.
As a result the unemployment rate dropped to 3.8% from 4.0% in January. The unemployment rate remains higher than the 3.5% unemployment rate recorded in February 2020, just prior to the Covid-19 pandemic.
“Job gains were strong again in February, with multiple aspects of the report highlighting a tight labor market,” MBA SVP and chief economist Mike Fratantoni said in a statement. “With job gains of 678,000, there is only a 1.4% gap in the level of employment compared to February 2020, and at this pace, the gap could be closed in three months.”
The labor force participation rate remained virtually unchanged from January rising 0.1 percentage point to 62.3%. This measurement remains below its pre-pandemic level of 63.4%.
“We want the unemployment rate to be low and the participation rate high to call a labor market healthy,” First American deputy chief economist Odeta Kushi said in a statement.
After losing 5,000 jobs in January, the construction sector rebounded gaining 60,000 jobs in February. Roughly three-quarters of these jobs were gained in specialty trade contractors with increases of 24,000 jobs in residential contractors and 20,000 jobs in nonresidential contractors.
“Residential building construction employment rose by 6,700 in February,” Kushi said in a statement. “The rise is positive news for an industry that has been grappling with chronic labor shortages. We need more homes built and, in such a labor-intensive industry, you need more workers to build more homes.”
As a whole, the construction sector is still 11,000 jobs below its February 2020 level, but experts like Kushi remain optimistic, especially for residential building.
“The skilled labor shortage in the construction industry is not new – it’s been an issue for more than a decade now,” she said. “However, there is some promising news this month: there have been eight straight months of gains in residential building, up 6.2% compared to pre-COVID. Attracting skilled labor remains a key priority.”
The lion’s share of the job market growth in February came from the leisure and hospitality sector (179,000 jobs), the professional and business services sector (95,000 jobs), and the health care sector (64,000 jobs).
“Overall this was a good report,” Kushi said. “The supply of workers continues to fall short of demand, but the underlying momentum of the labor market recovery is strong, and falling COVID case counts provide further forward momentum.”
Though the report was overall positive, the overall slowdown in the real estate market has taken its toll on some sectors. Overall, there were 425,200 mortgage bankers and brokers in February, down from 426,000 the previous month but up from 399,800 a year ago.
Residential nonbank mortgage lenders lost 1,500 workers from their payrolls in January, while mortgage brokers increased their numbers by 1,700 workers, according to the BLS statistics.