On the downside, employment in construction sheds 61,000 jobs
Figures from the Bureau of Labor Statistics’ February employment report revealed a sharp pickup in job growth as bars and restaurants reopened thanks to the rollout of COVID-19 vaccines.
The US economy added 379,000 jobs last month, mainly driven by a 355,000-plus gain in the leisure and hospitality sector. Fannie Mae chief economist Doug Duncan sees this as a strong signal for the service sector reopening.
“As this sector is heavily dependent on people gathering in close proximity, we believe the efficient distribution of effective COVID-19 vaccines will be crucial to support the ongoing recovery,” he said.
The unemployment rate edged down to 6.2% and is well below the 14.8% peak in April 2020. But despite last month’s drop, 10 million people remain unemployed, with 4.1 million among the long-term unemployed – up 125,000 month over month. The labor force participation rate hovered at 61.4% in February.
“Participation has been slow to rebound from the depths of the downturn last year, a discouraging sign for the recovery. The number of people on temporary layoff fell by over 500,000, while the number of permanent job losers was unchanged,” Duncan said. “Furthermore, the number of persons working part-time but who would prefer full-time employment rose slightly, a negative sign for labor demand. Finally, residential construction employment (including specialty trade contractors) edged down in February; while this was likely affected by severe winter weather, the lack of employment growth does not ease the supply constraints present in this sector.”
Severe winter storms have led to a decline in construction employment, which fell by 61,000 last month. Employment in the industry is now 308,000 below the pre-pandemic level set in February 2020. Additionally, the jobs report posted 69,000 job losses in state and local government education.
On the bright side, MBA Chief Economist Mike Fratantoni spotted a “potential positive sign” for employment activity. He said that the uptick in the number of workers returning to office in February might boost hiring in the coming months (22.7% teleworked due to pandemic vs. 23.2% in January).
“All in, this report is strongly positive for the broader economy’s growth prospects over the next several months. We have been expecting a burst of activity from pent-up demand as the vaccine rollout continues. This may be the first sign of that increase. Higher employment will support a very strong spring housing market, while somewhat higher mortgage rates will continue to slow refinance activity.”
