Construction industry registers third straight month of modest declines but is up by 239,000 in the past year.
By Manuel Gutierrez, Consulting Economist to NKBA
There’s reason to celebrate the labor market’s strong June release: employment grew by 850,000.
Although the nation is still 6.8 million below February 2020 pre-pandemic employment levels, June’s growth, as seen in Figure 1, is the largest since August 2020, which added 1.58 million jobs.
However, had the shutdown not occurred, total employment should be 156 million, or 10.3 million more than are employed today.
Construction did not enjoy the job growth of others, with employment actually contracting in June by a modest 7,000 jobs, the third straight monthly decline for the industry. Despite these recent setbacks, however, employment in the industry has risen by 239,000 over the past year. There are currently 7.4 million people working in the Construction sector, 205,000 fewer than there were prior to the pandemic. Figure 2 delves into specifics by sub-group.
Residential Buildings rose by 2,500, total Buildings Construction by 5,600, while Specialty Trades fell.
The unemployment rate moved up slightly, by 0.1% to 5.9% in June (Figure 2, left panel). The increase in the unemployment rate — despite the jobs added this month — is because the overall size of the labor force is growing, with 151,000 people joining it.
Despite June’s modest increase, the unemployment rate has been generally improving since April 2020, when it stood at 14.8%. The question is whether the rate can continue to fall toward the pre-COVID level of 3.5%, or whether it remains in the 6% range for the foreseeable future.
The modest deterioration in the overall unemployment rate was not evident across all age groups. In fact, a comparison of the figures in the right panel of Figure 3 shows that the rate for two age groups actually improved.
Unemployment among 20-to-24 year-olds fell by a full percentage point, from 10.1% to 9.1% in June. The 45-54 year-old segment also improved, by 0.2% to 4.6%. Unemployment among those 55+ remained unchanged at 4.9%. All others registered an increased unemployment rate for June.
Digging deeper, of the 850,000 jobs added last month, 22% were generated by the government.
“In a positive surprise, 850,000 jobs were added in June — the most in 10 months.”
Nearly two-thirds of job growth was in Hospitality, generating 269,000 positions. (Figure 4). Even with this substantial gain, total employment in this industry remains 1.66 million short of its pre-pandemic January 2020 level. Employment in Hotels (including casinos), one of the two major components of Hospitality, is still 22% below January 2020 levels. However, the major component, Restaurants & Bars, has had a better recovery, and is now off by just 10%.
The various levels of government added 188,000 jobs in June. The impetus behind job creation differs between the government and private sectors. While private-sector growth is based on the ability to add revenues or wealth, the government relies on taxes or borrowing extracted from the private sector to increase its employment numbers.
