Key Takeaways:
- Economists had expected 720,000 new jobs;
- August total is less than one-quarter the July job increase and less than half of the monthly average for the year;
- Construction industry jobs are just 3% below pre-pandemic levels, much better than most other sectors;
- Residential building is one of the few areas that is tracking above the February 2020 high point.
By Manuel Gutierrez, Consulting Economist to NKBA
After a string of months showing ever-larger increases in job creation, August employment rose by a disappointing 235,000. This was significantly below the 720,000 projected by Dow Jones economists, and is less than a quarter of the number added in July.
The Bureau of Labor Statistics had revised upward the estimates for the previous two months, increasing the July figure by 110,000 to the 1.053 million shown in Figure 1.
Job creation in August essentially replicates 2021’s low, reached in January, of 233,000. Since the beginning of the year, excluding August, an average of 636,000 jobs have been added each month.
Job creation stalled in August, as the 235,000 new jobs were less than one-third of what was expected by economists.
Factoring in the upward revisions of the previous two months, the U.S. workforce remains 5.3 million jobs behind the peak employment of 152.3 million that was logged in February 2020, prior to the onset of the pandemic.
The gap from February 2020 is still concentrated in two of the hardest hit industries, Entertainment and Health Care (Figure 2). Jointly, they account for one in six job losses since COVID-19 began in the U.S. Employment in the entertainment industry, which includes casinos, sports arenas, movie theaters and similar venues, is still 376,000 short of the 2.5 million jobs the industry supported in February 2020, while health-care employment is 513,000 below its previous mark of 15.5 million.
Third on the list of industries registering a shortfall is Mining. This sector includes oil extraction, which has been impacted by both the drop in demand during and after the worst of the pandemic, and the change in economic policies, which have been moving away from fossil fuels.
Closer to K&B remodeling, Construction employment is currently 3% below its February 2020 level, when there were 7.65 million jobs in the industry.
The number of construction jobs was virtually unchanged in August from July. Small gains in residential construction employment were offset by losses in nonresidential. As Figure 2 illustrates, Residential Building is one of the few areas where there are more jobs now than there had been prior to the pandemic.
Residential building itself accounts for 12% of all construction jobs, amounting to 881,000 workers in August, virtually the same as in July.
Availability of data for the major segments within construction lags by a month, with July the latest report available, shown in Figure 3.
Employment in the four segments within the residential sector increased in July and, in fact, all four have enjoyed gains at least since the beginning of the year. Note in Figure 3 that employment in two of the sectors, Single-Family Housing and Operative Builders, follow a rising trend denoted by the blue line. Employment in these two segments has either been rising or has remained stable over the last few months.
Employment in Multifamily housing has declined over the last few months, as has Homeowners’ Remodeling. For both these segments, fewer and fewer workers have been added over the last few months.
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