The surge in hiring nationwide in the first two months of the year has been turbo-charged by a sizzling housing market.
The economy created 273,000 new jobs in both February and January, aided by milder than usual winter weather. The construction industry alone generated 17% of the two-month total, but employment gains were even higher if other work linked to housing are included.
Take the increase in jobs in February. Almost 30% involved construction, architectural and engineering services and financial planning tied to real estate, calculated Steve Blitz, chief economist at TS Lombard.
A housing market that was sputtering just six months ago has been re-fueled by a steep drop in interest rates to fresh record lows. More prospective buyers have entered the market and builders have stepped up construction.
Don’t expect employment to keep rising so rapidly, however.
For one thing, the housing industry is still experiencing broad shortages for a variety of specialized construction jobs, a problem made worse by tighter restrictions on immigration. Immigrants have provided a bigger pool of labor in the past.
The supply of new and previously owned homes for sale, what’s more, is still quite low by historical standards. That’s pushed prices higher and mitigated some of the benefits of lower mortgage rates.
The threat from the coronavirus epidemic, meanwhile, could act as a disincentive for potential buyers in the next few months if they start to worry about job security.
Finally after all the jobs created in January and February, builders won’t have to add as many workers in the spring. The last time the industry posted strong employment gains in the first two months of the year, in 2018, hiring slowly sharply in March and April.