Chart: Construction Labor Market Cooling Off
The construction labor market is cooling off as economic activity slows in response to tighter monetary policy, according to the latest job openings data from the Bureau of Labor Statistics.
As forecasted over the last two months, the count of open construction jobs is now falling, declining from 405,000 in May to 334,000 in June. The construction job openings rate ticked down to 4.2% in June, after reaching a data series high of 5.5% in April.
The housing market remains underbuilt and requires additional labor, lots and lumber and building materials to add inventory. However, the market is slowing due to higher interest rates, yielding a slowing of the count of unfilled positions in the sector.
Hiring in the construction sector dipped to a 4.5% rate in June. The post-virus peak rate of hiring occurred in May 2020 (10.4%) as a rebound took hold in home building and remodeling.
Despite slowing of building activity, construction sector layoffs remained low at a 1.7% rate in June. In April 2020, the layoff rate was 10.8%. Since that time however, the sector layoff rate has been below 3%, with the exception of February 2021 due to weather effects.
Looking forward, attracting skilled labor will remain a key objective for construction firms in the coming years. However, while a slowing housing market will take some pressure off tight labor markets, the long-term labor challenge will persist beyond an ongoing macro slowdown.
NAHB Chief Economist Robert Dietz provides additional analysis in this Eye on Housing blog post.