The job market remains strong in 1999 - Statistical Data Included

Monthly Labor Review, Feb, 2000 by Jennifer L. Martel, Laura A. Kelter

Low interest rates benefited construction and related industries. In the first quarter of 1999, the percentage of families able to buy American homes reached the highest level in recent history, as both low interest rates and healthy income gains helped make housing more affordable.(9) Despite increasing mortgage rates during the second half of the year, sales of new homes were sustained at very high levels throughout 1999, even outpacing the sales records of 1998.

Employment in many construction-related industries posted continued growth during 1999, but the building boom eventually resulted in shortages, not only of labor, but also of materials.(10) Most of the job growth in construction supported residential building and the contracting of specialized trades such as plumbing, painting, and carpentry services. General building contractors, which include residential construction firms, increased employment by 3.8 percent in 1999, compared with 5.4 percent in 1998. Job gains in all construction industries were weaker in 1999 than their average for the current expansion overall and also weaker than in 1998.

Industries that produced basic construction materials increased their payrolls as they stepped up production. Demand for lumber and wood products grew at a moderate pace, with job growth in that manufacturing industry slightly below that of 1998. Companies that manufacture furniture and fixtures also increased their payrolls, although the rate of growth declined somewhat following an unusually high rate of gain in 1998. Employment across all construction-related manufacturing industries grew by 1.4 percent in 1999, compared with a decline in overall manufacturing of 1.5 percent.

The momentum in construction also spilled over into some areas of retail trade. Strong growth was evident in stores that sell building materials and garden supplies, lending further credence to the importance of the construction industry in explaining overall employment growth. Consumers also frequented retail stores to make purchases for their residences, resulting in a healthy 5.3-percent job gain in furniture and appliance stores. Orders tracked by the American Furniture Manufacturers Association reflect increased purchases over 1998, as bedroom, dining room, and occasional furniture all registered moderate gains.(11)

Agricultural services, which include landscape services, grew by 5.4 percent in 1999. The industry followed the pattern of the construction industry for the majority of the year. The contracting of agricultural services was in preparation for new-home sales, as well as for maintaining landscaping for existing homes and businesses.

Employment in real estate and finance continued to benefit from strong growth in the housing market, as job gains in mortgage banks and brokerages, title insurance, and real estate agents were robust through the first half of the year. However, employment related to refinancing slowed as interest rates increased, a trend that began early in the year. Declines in refinancing lowered the demand for mortgage bankers and brokers as the year progressed, and the industry shed jobs from June through the end of the year. Growth in the finance industries was dampened not only by these job losses, but also by continued consolidation among banks and savings institutions.