Job growth in the U.S. had another strong month in June and the overall unemployment rate held steady, defying rising interest rates and fears of an impending recession. The construction sector, meanwhile, had only a slight gain, according to the U.S. jobs report, released Friday.
The report showed a total of 372,000 nonfarm payroll jobs were added in June, compared to 384,000 in May. The unemployment rate of 3.6% has now remained unchanged for four months in a row, and is marginally higher than the pre-pandemic level of 3.5% recorded in February 2020.
The economy registered 450,000 job gains on average per month during the first half of the year — a robust pace by historical standards, but 524,000 jobs shy of the pre-pandemic high mark.
“At the current pace of hiring, we’ll reach that milestone by August,” said Realtor.com’s chief economist Danielle Hale, said in a statement.
According to the U.S. Bureau of Labor Statistics, notable job gains occurred in professional and business services, leisure and hospitality and healthcare. But employment showed little change over the month in other major industries, including construction, retail trade, financial activities, government and other services.
The construction industry added 13,000 jobs in June, significantly fewer than the 34,000 reported in May. Still, the sector showed an unemployment rate of 3.7%, compared to 7.5% in June 2021. This June, some 385,000 people who list their industry as construction were unemployed, compared with 730,000 in June 2021.
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“As it pertains to the housing sector, construction jobs did show a slight gain over the month, mostly driven by nonresidential construction jobs,” said Joel Kan, the Mortgage Bankers Association’s associate vice president of Economic and Industry Forecasting, according to a statement.
The report showed an overall reduction of 3,900 jobs tied to the construction of buildings, with 4,500 positions lost in the residential building subcategory. Meanwhile there was a modest gain of 600 roles for construction workers tied to work in the construction of nonresidential buildings. Heavy and civil engineering construction added 4,500 jobs and specialty trade contractors had a gain of 11,800 jobs.
The real estate industry also saw job growth in June, adding 1,900 jobs. A total of 3,700 jobs were added in the field, but 1,700 were lost in the rental and leasing services sector and 100 were lost in lessors of nonfinancial intangible assets.
“The housing market continues to suffer from a low supply of homes for sale, as material and labor costs remain elevated,” Kan said. “The strong labor market is still positive for the housing market, but overall demand has cooled from the recent jump in mortgage rates, high home prices and rising economic uncertainty.”
The average hourly earnings of production and nonsupervisory employees in construction increased from $32.14 in May to $32.25 in June, higher than the $32.08 average for private employees in the country.
“Although wage gains are higher than is historically typical, they are not outpacing recent inflation,” Hale said. “For this reason, households making a move in today’s market – whether choosing to rent or purchase – can expect to pay a larger share of their monthly budget for housing,” Hale said.
Doug Duncan, chief economist at Fannie Mae, said the current jobs report, and, “in particular, the robust payroll and wage gains, should re-affirm the Federal Reserve’s commitment to aggressive policy-tightening in the coming months.”
Kan, from MBA, added: “With the Federal Reserve intently focused on bringing down inflation, we expect this will not alter near-term expectations for another 75-basis-point rate hike at the next FOMC meeting.”
