Robust hiring at hotels, restaurants and bars, as well as in construction and health care, powered an unexpectedly strong jobs increase in July, the government announced Friday. Those industries accounted for 43 percent of the 528,000 gain.
The unemployment rate fell to 3.5 percent, according to government data released Friday, despite Federal Reserve actions to cool the economy with higher interest rates.
“This is not a picture of an economy in recession,” said chief economist of the Mortgage Bankers Association, Mike Fratantoni.
The construction industry hired 32,000 workers last month despite a slowing housing market. “Builders continue to add supply to a market that needs it,” Fratantoni said in a statement.
Observers said contractors would have hired more employees if they could find them. Construction companies “continue to grapple with finding sufficient skilled labor,” noted RSM real estate analyst Nick Grandy.
There was, however, bad news for office building owners: For the first time in months, the percentage of people who worked from home remained unchanged from the month before, slowing the trickle of people headed back to the office.
The strong labor market should continue to support home prices, according to David Auerbach, who manages residential real estate funds at Armada ETF Advisors.
While home sales have slowed nationally in response to higher mortgage rates, the rising cost of renting a home has been a major contributor to the government’s measure of inflation.
The strong jobs report is “no comfort” for those wishing that a slowdown would reduce inflation or lead to a “less aggressive path of rate hikes from the Federal Reserve,” Fratantoni said.
Real estate brokerages were among the first companies last month to announce layoffs and hiring freezes, reflecting slow home sales and the industry’s sensitivity to mortgage rate increases. Companies including Meta, Microsoft and Walmart have since followed suit.
Mortgage rates have since dropped, but reduced demand for home loans has led to widespread layoffs in the industry.
Still, the overall labor market remains tight.
The number of job openings at the end of June remained well above the number of unemployed people searching for work, according to separate data released by the Labor Department this week.