Leisure, hospitality, construction lead strong May job gains

Real estate hiring helps put US economy near pre-pandemic levels

(iStock/Illustration by The Real Deal)
(iStock/Illustration by The Real Deal)

Last month was a strong one for real estate–related hiring as the U.S. economy approached pre-pandemic job levels.

Employers hired 390,000 workers last month with substantial gains in leisure and hospitality, construction, and warehousing and storage. Unemployment remained at 3.6 percent as the number of nonfarm jobs rose to within 822,000, or 0.5 percent, of its pre-pandemic mark.

“By almost any measure, this is one of the strongest job markets in the past 50 years,” Mike Fratantoni, chief economist of the Mortgage Bankers Association, said in a statement.

Hirings at restaurants, bars and hotels grew by 84,000 positions last month, the largest number of people newly employed in any industry.

Construction hiring took off last month with an increase of 36,000 jobs after a mostly flat April. The industry employs 40,000 more people now than in February 2020. Homebuilders still have plenty of reasons to stay busy.

“Although housing inventory is beginning to increase, demand continues to exceed supply even as mortgage rates have spiked,” according to Fratantoni.

The real estate industry hired a seasonally adjusted 14,000 people in May as the spring sales cycle blossomed. But finding workers remains a problem. The industry had an all-time record number of job openings through the end of April, according to government figures.

In a slightly positive sign for commercial landlords, the percentage of people working remotely fell in May to 7.4 percent from 7.7 percent.

Warehousing and storage facilities added 47,000 jobs to the economy last month. Nearly 500,000 more people are operating those facilities than before the pandemic.

Retailers, however, cut back on hiring, and employment there fell by 61,000 jobs. Still, the retail industry employs 159,000 more people than it did pre-Covid.

Average hourly wages grew in May to $31.95 for an annual increase of 5.2 percent. Hospitality saw the largest wage gains, according to Ryan McAndrew, a real estate analyst at the consultancy firm RSM.

“The continued strength in the job market will provide ongoing support to housing demand,” said Fratantoni. Annual inflation of goods and services, meanwhile, rose above 8 percent in April.

“[T]his degree of labor market tightness will likely continue to put upward pressure on wages and prices,” said Fratantoni, predicting the Federal Reserve would continue to raise interest rates in 50-basis-point increments.

Entertainment hubs Atlantic City and Las Vegas have had the strongest job growth percentage since last April, although leisure and hospitality employs 8 percent fewer people, or 1.3 million, than before the pandemic.

The New York, Los Angeles and Dallas metro areas have added more workers than other cities since last year, according to Labor Department data through the end of April.