New Year Begins on High Note With Hiring Surge in Construction Sector
February 2020
Better-than-expected job additions do not sway forecasts. Employers added 225,000 positions to payrolls in the first month of 2020, starting the year off on a strong foot after an average of 176,000 roles were created per month in 2019. Investors should not assume, however, that January’s more positive figures will herald accelerated growth in 2020. Both 2018 and 2019 began with elevated job creation, only for the pace of employment growth to moderate as time progressed. While last month’s figures illustrate that there is still upward momentum left in the labor market, the overall pace of hiring is continuing to slow, falling in line with current projections for 1.5 million new jobs in 2020.
Increased real estate development adds construction jobs. The construction sector reported particularly strong employment growth last month with 44,000 new roles, well above the 12,000 positions added monthly in 2019. Elevated commercial and residential development is likely driving this gain. Both multifamily and office openings in 2020 will be near or at cycle highs, while single-family home starts recently hit their highest level since the beginning of the last recession. A national housing shortage supports the greater number of single- and multifamily deliveries, although a focus on higher-tier products could create pockets of saturation in some areas. Increased office construction is also a positive byproduct of steady hiring in the professional services and technology sectors, although the pace of arrivals may modestly weigh on fundamentals in the short term.
