Hospitality Tops Job Gains, Mortgage Rates Keep Rising
Leisure and Hospitality Tops Job Gains
Leisure and hospitality was the leading employment-creating industry in February as the U.S. added 311,000 jobs from the prior month, the Labor Department reported Friday. The month’s unemployment rate was 3.6%, up slightly from January’s 3.4% but still close to a 50-year low in what remains a generally strong employment market despite high inflation and other lingering headwinds.
Job gains reflect consumer and business demand and have ramifications for future real estate demand. The government said leisure and hospitality added 105,000 jobs in February, with food services and drinking places growing by 70,000 and retail trade adding 50,000. Even with rising tourism and travel, the government said leisure and hospitality employment remains about 2.4% below its pre-pandemic level of February 2020.
Government employment grew by 46,000 for the month, with healthcare jobs increasing by 44,000 and construction adding 24,000. Industries seeing job declines included information technology dropping by 25,000, motion picture and sound recording down 9,000, and telecommunications down 3,000.
Ken Simonson, chief economist for the Associated General Contractors of America trade group, said “hefty pay raises” for hourly workers helped the construction industry boost employment more steeply than most other sectors in February.
“Average hourly earnings for craft and office workers in construction have consistently risen more sharply than across the private sector as a whole for the past several months,” Simonson said in a statement March 10. “That has helped the industry add employees at a strong clip — but many more are still needed.”
Mortgage Rates Keep Rising
Mortgage rates posted another week of escalation after the Federal Reserve showed few signs that it was looking to back off anytime soon on hikes in its own key lending rate. The latest national survey of lenders by government-backed loan agency Freddie Mac showed rates hovering close to 7% and well above year-earlier levels for the week ended March 9.
The 30-year, fixed-rate mortgage averaged 6.73%, up from 6.65% in the prior week and 3.85% a year earlier. The average for 15-year, fixed-rate loans was 5.95%, compared with 5.89% a week earlier and 3.09% a year earlier. Rising rates are generally keeping things slow when it comes to home sales, as the Fed keeps upward pressure on rates to contain inflation.
“Overall, consumers are spending in sectors that are not interest-rate sensitive, such as travel and dining out,” Freddie Mac Chief Economist Sam Khater said in a statement. “However, rate-sensitive sectors, such as housing, continue to be adversely affected. As a result, would-be homebuyers continue to face the compounding challenges of affordability and low inventory.”
Mortgage rate reports are based on averages from national lender surveys, and Freddie Mac has noted there is a wide variety of rate offerings. Another closely watched survey, from Mortgage News Daily, showed 30-year, fixed-rate mortgages averaging 6.76% and 15-year fixed loans averaging 6.25% as of March 10.
Elgin Development Group
Lou Hirsh, CoStar News
- March 13, 2023