In December of 2021, there was a prominent surge in United States job growth, surprising economists whose projections had been far more conservative. An impressive 467,000 jobs were added to the economy during the final month of the year, significantly outpacing predictions, according to data from the Bureau of Labor Statistics. It’s indeed noteworthy considering the monthly jobs report released by the BLS was coming on the heels of a relatively sluggish November.
The foreground of this performance shows a steady strengthening of the economy despite emerging business obstacles, such as the challenges associated with the Omicron variant of COVID-19. Public health concerns not only failed to curtail job growth, but it seems as though they were barely a speed bump. Economists had been forecasting gains of just 125,000 jobs due to these constraining circumstances, thus making the reality of 467,000 new jobs an exceeding win for the economy.
Job growth, along with the unemployment rate, are key indicators when it comes to understanding the health and direction of an economy, and as such, this surge is expected to have far-reaching implications on various aspects of the economy, including the housing market.
This employment upturn is especially important when considering the job losses that occurred at the height of the COVID-19 pandemic. The resurgence in job growth sends a reassuring signal that the U.S. economy is steadily recovering, and more importantly for some, a steady supply of jobs would significantly reduce the risk of housing market disruptions.
A lot of people were forced to re-evaluate their housing situations during the pandemic due to a change in job status. A pressing need for larger spaces became apparent as remote working and online schooling became the norm. These changes were significant, causing turbulence in the housing market. With the recent job gains, it is expected that there could be a period of relative stability in the housing market on the horizon.
Another interesting point worth taking into account is that the number of job gains was widespread across a variety of sectors. Increases were seen in areas such as professional and business services, which saw a rise of 98,000 jobs. There were also significant job increases in the transportation and warehousing sector, which grew by 47,000 jobs, as well as an increase of 38,000 jobs in the construction industry. Furthermore, health care and social assistance reported an added 47,000 jobs, retail trade gained 32,000 jobs, and manufacturing rose by 26,000 jobs.
The results of these increases imply a degree of resiliency and adaptability within the various sectors of the economy, as they were able to continue their recovery process despite the challenges faced in recent times. This resilience is likely due to a number of factors, most notably the increased vaccination rates and the gradual return to full-time in-person work, which has given industries the confidence to undertake hiring sprees.
The decreased unemployment rate of 3.9% also underlined the ongoing recovery in the U.S. economy, it being the first time in several decades that the U.S. unemployment rate has fallen below 4%. The two metrics (job gains and unemployment rate) together portray an encouraging picture of economic recovery, particularly as it concerns the labor market.
Moreover, the pay scale has seen improvements as well. Average hourly earnings for all employees rose by $0.17 to $31.31, marking a substantial progression. The uptick in wages likely resulted from employers’ efforts to attract and retain workers and could also be a response to inflation and cost-of-living adjustments.
All in all, the labor market progress bodes well for the housing market. Homeowners feeling secure in their employment are more likely to continue maintaining their current homes or consider buying new ones. Additionally, higher wages potentially equate to more spending power for potential home buyers, which could stimulate more activity in the housing market.
Despite these positive signs, it’s essential not to become complacent, as the economy faces other pressing concerns, exacerbated by the ongoing pandemic. Inflation is at its highest level in over three decades, supply chain disruptions persist, and the nationwide worker shortage continues to challenge businesses.
While the economy appears to be on a solid track toward recovery, navigating through such macroeconomic pressures will require continuous monitoring and smart decision-making from policymakers and businesses alike. The job growth in December presents an optimistic narrative regarding the economy’s overall health, but it is just one part of the bigger picture. The overall progress and direction of the economy will be contingent on how effectively these other challenges are managed.
If business decisions and economic policies can create a nurturing environment for additional positive strides, the U.S. labor market and beyond could continue to recover and grow throughout 2022. Balanced economic growth, robust labor market health, and consistent progress will be the cornerstone for a sustainably healthy U.S. economy and an active housing market.