The unemployment rate remained unchanged at 6.7 percent in December, according to the U.S. Bureau of Labor Statistics. Total nonfarm payroll employment declined by 140,000—a reflection of increases in COVID cases and “efforts to contain the pandemic,” according to the report.
The construction industry, however, added 51,000 jobs in December—much needed in the real estate industry which has been dealing with a shortage of inventory exacerbated by the pandemic. Of these jobs, +9,000 were in residential building, +18,000 was in nonresidential specialty trade and +18,000 in heavy and civil engineering construction. Employment here, however, is still below its February level, reported at 226,000 in December.
“The job numbers came in lower in December (down 140,000), 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. The economy will turn higher very soon due to the second stimulus package that was passed in late December, and a steady vaccine distribution,” said National Association of REALTORS® Chief Economist Lawrence Yun. “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.”
“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 30-year mortgage rate will move up from the current record low of 2.65 percent to possibly 2.9 percent by mid-year. Housing demand should remain solid even with this change,” added Yun. “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. More construction is tilted toward single-family homes and away from apartments and condominiums. Therefore, housing inventory will show up steadily throughout the year.”
The Mortgage Bankers Association released the following statement:
“The intensifying pandemic impacted the labor market to close 2020. Faster layoffs led to a loss of 140,000 jobs in December, but the unemployment rate was unchanged. Total employment remains 6.5 percent below the level in February 2020, with the greatest job losses still in the leisure and hospitality sector—down 23 percent. There were 372,000 job losses at restaurants and bars last month, which is obviously a direct impact of the restrictions due to the pandemic.
“The increase in those on temporary layoff reflects the impact of renewed lockdowns and other restrictions, while the decrease in those in the long-term unemployed category is positive, as it may reflect that these workers have been successful in finding work. While this is good news, some workers’ new job may well be at a lower income than their prior position.
“It is notable that there were gains of 51,000 in construction employment in December. The lack of inventory is the biggest constraint to further growth in home sales this year. More workers in the sector should support the faster pace of housing construction the market needs.
“MBA not only expects that job growth will pick up in the second half of the year, we anticipate a strong rebound, as pent-up demand for a range of goods and services will require rapid hiring as the pace of vaccine deployment accelerates. Despite the negative news from this report, we still expect 2021 to be a record year of purchase mortgage originations volume.” — MBA SVP and Chief Economist Mike Fratantoni