Amid fears and talk of a recession, job growth in the U.S. remained strong in July, with nonfarm payroll employment rising by 528,000 jobs from the month prior, according to data released Friday by the Bureau of Labor Statistics.
After this latest job gain, the unemployment rate fell to 3.5%. Both total nonfarm employment and the unemployment rate have returned to their February 2020 pre-pandemic level.
“Despite the negative reading on second quarter GDP, this is not a picture of an economy in recession,” Mike Fratantoni, the chief economist at the Mortgage Bankers Association, said in a statement. “And even though initial claims for unemployment insurance have increased modestly in recent weeks, these data show that the pace of hiring, spurred by more than 10 million job openings, continues to exceed any increase in layoffs.”
Construction gained 32,000 jobs in July, with residential building gaining 2,900 jobs and residential specialty trade contractors gaining 11,200 jobs. Employment in the construction sector is now 82,000 jobs higher than in February 2020.
“While the housing sector slows, the construction industry has faced a skilled labor shortage for many years and will continue to try and fill empty positions. The best way to attract and retain workers is to pay more,” Odeta Kushi, the deputy chief economist at First American, said in a statement. “Residential building employment is up 7.5% compared to pre-pandemic, while nonresidential building employment remains 4.7% below.”
The real estate, rental and leasing services sector gained 1,400 jobs in July. This increase is solely attributable to the rental and leasing services sector, as employment in real estate remained relatively unchanged from the month prior.
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“Home sales are running below the pre-pandemic numbers seen in early 2020 and slightly below the 2019 annual total. Mortgage rates appear to be settling down over the past month at below 6%, with the past week dipping to 4.99%, but they are well above the 3.6% to 3.9% rates in the months before the pandemic. In other words, home sales are more impacted by mortgage rate changes than jobs,” Lawrence Yun, the chief economist at the National Association of Realtors, said in a statement.
Despite this Yun remains hopeful due to the recent decline in mortgage rates.
“But the recently stabilizing mortgage rates suggest home sales will also soon stabilize and are likely to make steady gains in 2023,” he said.
The lion’s share of the job growth in May came from gains in the leisure and hospitality sector (up 96,000 jobs), the professional and business services sector (up 89,000 jobs), and in the health care sector (up 70,000 jobs).
One industry that has fared poorly is mortgage – mortgage banking companies shed 9,300 workers in June, according to the BLS. As of June 30, “real estate credit” companies employed 274,700 workers in June, down from 284,000 a month prior. A year ago there were nearly 300,000 workers at mortgage banking firms. Just 900 workers at mortgage brokerage companies were laid off in June, according to the BLS figures.
