April 2, 2021

The U.S. jobs market kicked into a higher gear in March. Construction employment continues to grow, with residential building taking lead. And pending home sales fell in February, but that may prove to be temporary.

The labor market gets a much-needed boost

• 916,000 jobs were added to the economy in March, the most in a single month since August.
• he national unemployment rate fell 0.2 percentage points to 6.0%.

Residential construction holding strong in the face of rising prices

• Employment in the residential construction industry increased 1.2% in March from February.
• Spending on private residential construction fell 0.2% in February from January, but is up 21.1% from a year before.

Pending sales slump in February, but better days are ahead

• The National Association of Realtors’ Pending Home Sale Index fell 10.6% in February from January and 0.5% from February 2020.
• The Conference Board’s Consumer Confidence Index showed 8.4% of respondents surveyed in March plan to buy a home in the next six months, the highest share in the survey’s history (dating to 1978).

So what? 

Already showing signs of improvement in recent weeks, the labor market got a jolt of energy this week. The 916,000 jobs added to the economy in March were the 7th highest monthly increase in history and the most in a single month since August. The positions added were mostly permanent ones, as opposed to temporary roles which made up the bulk of jobs added in January and February. Perhaps most encouragingly, improvements were felt across nearly all major sectors — a stark shift from February’s report, which showed gains were mostly concentrated in the leisure and hospitality sectors. Hiring in state and local government positions was notably strong, in part due to the reopening of schools across much of the country. Despite the monthly improvement, the labor market still has a long way to go before being fully healed. The economy is down 8.4 million jobs compared to just before the pandemic arrived in earnest on U.S. soil, and severe divides in labor prospects between races, genders, wage levels and other groups remain. Still, today’s report should be viewed as a solid step in the right direction for the labor market and the economy.

The construction sector also experienced a considerable increase in hiring in March, adding 110,000 jobs – likely a signal that a hiring backlog caused by February’s winter storms is starting to clear. Despite facing constraints posed by spiking materials costs and limited land availability, momentum in the construction industry – in particular, residential construction — appears to be durable. Residential construction jobs have steadily increased over the past several months with another 10,000+ jobs added in March from February (a 1.2% increase). Non-residential construction jobs – a similarly sized subset — have had a more uneven recovery since the depths of the pandemic, but also added 7,600 jobs (+0.9%) on the month. A separate report released this week found that private residential construction spending grew 21.1% in February from a year prior, while non-residential construction spending fell 9.7% over that same period.

Weather hindered homebuilding and hiring activity in February, and it likely limited home shopping activity as well. The 10.6% monthly decline in NAR’s Pending Home Sales index was likely exacerbated by the harsh storms experienced across much of the country in February – particularly the South and Midwest regions. After keeping pace with 2019 for most of the latter half of 2020, home listing activity has started the year off at a relatively sluggish pace, leaving fewer homes for buyers to bid on and stoking already red-hot competition. That said, listing activity is showing signs of recovery, especially in markets that were impacted by the storms, and applications for home purchase mortgages have shown consistent improvements over the past several weeks. What’s more, consumer confidence surged in March, with more people indicating that they plan to buy a home in the next six months than at any time since 1978.

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