After seemingly bucking the effects of the Omicron variant and adding more jobs than expected last month, the U.S. labor market continued to show strong growth, adding another 678,000 jobs in February, according to the Bureau of Labor Statistics, with unemployment edging down amid a broad economic recovery.
Approaching the historically low levels of the pre-pandemic, the unemployment rate sat at 3.8%, last month compared to 3.5% exactly two years ago right before Covid devastated the economy.
These numbers likely do not reflect any potential volatility created by the invasion of Ukraine and ensuing sanctions against Russia, though chief economist of the Mortgage Banker Association (MBA), Mike Fratantoni, said in a statement that the report “is likely to reaffirm recent comments from Federal Reserve officials indicating that they still plan to increase rates at their upcoming March meeting.”
National Association of REALTORS® (NAR) Chief Economist Lawrence Yun agreed by saying in a statement that “the Federal Reserve will be raising interest rates this month and beyond.”
However, the overall trend of job gains is a hopeful indication that a recovery from the pandemic remains on track, with Fratantoni especially optimistic for the near future.
“With little change in labor force participation, the unemployment rate is likely to go lower in the months ahead,” Fratantoni added. “We now expect it will dip below 3.5%, the very low level last reached in February 2020.”
The number of persons not in the labor force but who want a job is also still above its pre-pandemic level even as it declines, with 5.4 million Americans falling into that category today compared to 5 million two years ago.
Unemployment has remained higher for Black and Hispanic Americans, at 6.6% and 4.4% respectively, though that is down from 9.9% and 8.5% a year ago in February of 2021.
The unemployment rate for women also remains low at 3.6%, though many have noted this number can be misleading as a greater proportion of women have permanently left the workforce during the pandemic.
Yun pointed out some cracks in the recovery that, at least in the short term, could indicate continued economic pain, with some industries struggling and inflation continuing to sit at historic levels.
“Employment in the oil sector is still down by 9,000 compared to pre-Covid days, so expect high oil prices for some time,” Yun said. “Inflation is already high at 7.5%, and the latest wage gain (only 5.1% in February) is not catching up.”
For housing specifically, both Yun and Fratantoni highlighted that many of February’s jobs were in the construction and housing industry, though the prospect of full relief for the inventory crisis still appears to be a long way off.
“More housing inventory will show up later in the year because jobs in residential construction and for general contractors have been steadily rising. There are 314,000 more workers now compared to March 2020,” Yun noted.
“Construction jobs were up 60,000, with gains in the categories for contractors,” Fratantoni said. “Permits for new homes have increased, and now we see hiring picking up. However, supply chain constraints continue to pose a challenge for builders meeting the strong demand for new homes.”
Jesse Williams is RISMedia’s associate online editor. Email him with your real estate news ideas jwilliams@rismedia.com.
