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01/08/2021

Jobs decline in December, but construction positions grow

Employment in the United States declined by 140,000 jobs in December, according to the latest Employment Situation Report from the Bureau of Labor Statistics.

The decline is being blamed on the recent increase in coronavirus (COVID-19) cases and efforts to contain the pandemic, the Bureau said. Most of the job losses took place in leisure and hospitality with a loss of about 498,000 jobs.

The U.S. unemployment rate remained unchanged at 6.7%, however.

Also, the change in employment for October was revised up by 44,000, from a 610,000 increase to a gain of 654,000. Additionally, the change for November was revised up by 91,000, from a 245,000 increase to a 336,000 gain. With these revisions, employment in October and November combined was 135,000 more than previously reported.

“The job numbers came in lower in December, but that was to be expected as the stimulus money from the first package during the spring months was fizzling out, and from new COVID-19 lockdown restrictions in some localities,” said Lawrence Yun, chief economist of the National Association of Realtors.

Yun says that the economy will turn higher very soon due to the second stimulus package that was passed in late December, and a steady vaccine distribution. 

“One of the top priorities for President-elect Biden will be to send additional money to go out in the early weeks of his administration,” Yun explained. “Therefore, the economy should be on a good upswing by late spring.

Retail trade added 121,000 jobs in December, with nearly half of the growth occurring in the component of general merchandise stores that includes warehouse clubs and supercenters (+59,000). But employment in retail remains 411,000 jobs lower than in February 2020.

Construction added 51,000 jobs in December, but overall employment in the industry is 226,000 below its February level. 

In December, employment rose by 14,000 in residential specialty trade contractors and 9,000 in residential construction. In December, employment also increased by 18,000  in nonresidential specialty trade contractors and 15,000 in heavy and civil engineering construction.

"As to the housing supply, the construction sector added 51,000 net new jobs in December. Job openings in the sector also are elevated, so even more workers will be hired in the upcoming months," Yun said. "More construction is tilted toward single-family homes and away from apartments and condominiums. Therefore, housing inventory will show up steadily throughout the year.”

Regarding stimulus money and its impact on the housing market, Yun said, "The dollars are being financed by government borrowing and indirectly from newly printed money. As a result, light upward pressure to mortgage rates are expected."

The economist expects the 30-year mortgage rate will move up from the current record low of 2.65% to possibly 2.9% by mid-year. "Housing demand should remain solid even with this change," he said.

Regarding other industries that saw job growth, employment in transportation and warehousing increased, adding 47,000 jobs in December. Wholesale trade employment rose by 25,000 in December but is down by 251,000 since February.

The complete Employment Situation Report from the Bureau of Labor Statistics is available here.