Renewed Hiring in Construction

Data from the BLS Job Openings and Labor Turnover Survey (JOLTS) indicate that construction job openings posted a monthly increase in December due to renewed hiring in the industry following the housing soft patch of 2018 and 2019.

The estimated number of job openings increased from the November total (217,000) to 239,000 in December, after reaching a post-Great Recession high of 434,000 in April. However, the December 2019 count of unfilled jobs represents a year-over-year decline relative to the 299,000 unfilled construction jobs in December 2018.

The open positions rate (job openings as a percentage of total employment plus current job openings) increased to 3.1% in December, after reaching a cycle high of 5.5% in April. On a smoothed, twelve-month moving average basis, the open position rate for the construction sector declined to 4.2%, reflecting the hiring slowdown of the past year. The peak (smoothed) rate during the building boom prior to the recession was just below 2.7%. For the current cycle, the sector has been above that rate since October 2016. While hiring slowed through much of 2019, recent data for the start of 2020 show a significant acceleration in home building employment.

The overall trend for open construction jobs has been, generally, increasing since the end of the Great Recession. This matches NAHB and other survey data revealing that access to skilled labor remains a top business challenge for builders, affecting a broad set of occupations. However, ongoing modest growth rates for housing construction are placing downward pressure on construction job openings. Recent data suggest that the count of open, unfilled jobs is near a cycle peak, while remaining elevated. This would nonetheless be a continuing sign for the need for additional worker recruitment into the industry given current rates exceed prior cycle peaks.

The construction sector hiring rate, as measured on a twelve-month moving average basis, ticked up to 5.6% in December as the housing rebound continued on lower mortgage interest rates. The twelve-month moving average for layoffs increased slightly to 2.8%, continuing a rising trend in recent months, likely connected to some market churn associated with housing affordability headwinds.

Article written by Robert Dietz on February 11, 2020 for NAHB Eye On Housing