Job growth stagnated in December, as rising COVID-19 cases and subsequent lockdowns and restrictions further pummeled the leisure and hospitality industries.
The latest report from the US Department of Labor showed total employment declined by 140,000 in December. While employment in leisure and hospitality declined by a whopping 498,000, those losses were partially offset by gains in the construction industry.
Construction added 51,000 jobs in December, although employment in the industry is still 226,000 below its February level.
“Residential construction jobs increased nearly 1.1 percent in December relative to November and are now 0.8 percent above their pre-pandemic levels in February,” said First American Deputy Chief Economist Odeta Kushi in a statement. “Increasing the number of construction workers is critically important to alleviating the labor shortage challenge and the gap between household formation and home building. More hammers, more homes.”
National Association of Realtors Chief Economist Lawrence Yun expects that even more construction workers will be hired in the upcoming months. “More construction is tilted toward single-family homes and away from apartments and condominiums,” Yun said in a statement. “Therefore, housing inventory will show up steadily throughout the year.”
While the unemployment rate remained unchanged at 6.7%, Yun said he expects to see improvement in 2021.
“The economy will turn higher very soon due to the second stimulus package that was passed in late December, and a steady vaccine distribution,” Yun said. “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. Therefore, the economy should be on a good upswing by late spring.”
While spring is expected to bring meaningful recovery, it is also likely to bring slightly higher mortgage rates.
“The dollars are being financed by government borrowing and indirectly from newly printed money,” said Yun. “As a result, light upward pressure to mortgage rates are expected. 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.”