Labor Market Posts Weak Gain at Start of 2021

8 Feb, 2021

The Bureau of Labor Statistics reported last week that the U.S. economy added just 49,000 jobs in the month of January following the December decline of 227,000.
In January, the construction sector lost 3,000 jobs — the first time since April that the sector has shed positions. Residential building and heavy and civil engineering jobs rose in January, while nonresidential and specialty trade positions fell.
The unsteady labor market recovery mirrors other high frequency data for the construction sector. In a separate release, the Dodge Momentum Index, a leading indicator for nonresidential building, posted an increase that lifted the Index above its pre-pandemic level. However, the dollar value of public building planning projects (schools, healthcare, etc.) in this month’s Momentum Index were at lows not seen since the Momentum Index began in 2002.
Commercial sector projects in planning (offices, warehouses, hotels, retail) are recovering, although that recovery is largely due to the warehouse sector. E-commerce distributors like Amazon Inc. are planning numerous warehouse projects to satisfy the growing demand for online shopping. Without the warehouse sector, this leading indicator for nonresidential construction would be well below the level seen prior to the COVID-19 pandemic. 
Construction starts have also suffered in the wake of weak economic and labor market growth. Nearly every sector and metropolitan area in the country posted significant declines in construction in 2020 as reported in Dodge Analytics' recent Beyond the Data newsletter. Many projects in planning continue to languish, and there is little hope for impetus to alter that trend during the early months of 2021. Hope will come, however, once the COVID-19 vaccine is more widely distributed among the nation’s population.