Jobs are on the rise, thanks in large part to a boost in the construction industry.
The latest jobs report from the U.S. Bureau of Labor and Statistics indicates that nonfarm payroll employment rose by 225,000 in January, shattering market expectations of 165,000. The real surprise, however, was the growth of construction-related jobs, which rose by 44,000 alone. BUILDER magazine says most of the gain occurred in specialty trade contractors, with increases in both the residential (+18,000) and nonresidential (+17,000) components. Construction added an average of 12,000 jobs per month in 2019.
In January average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $28.44. Over the past 12 months, average hourly earnings have increased by 3.1%. Average hourly earnings of private-sector production and non-supervisory employees were $23.87 in January, little changed over the month (+3 cents).
This is a positive development for housing, as the home building sector has been challenged by labor shortages and high costs for several years.
“Wages grew at 2.9% on a year-over-year basis in December 2019, but firmed to 3.1% in January,” says Joel Kan, Mortgage Bankers Association VP of economic and industry forecasting. “Increasing wage growth is a welcome sign for households looking to buy a home this spring.”
The National Association of Realtors’ chief economist Lawrence Yun also reacted to the latest data, stating, “The unemployment rate remains at super-low levels across all ages, all ethnic groups, and every other grouping of workers. That’s due to the unrelenting 20 million net job additions for over a decade since 2010.” He goes on to say that even in commercial real estate, vacancy rates have tilted down, implying more construction is needed.
Sources: NAR, BUILDER, TBWS