Stabilizing Construction Job Openings After Shift Lower

Due to tightened monetary policy, the count of open construction sector jobs shifted lower in the early Spring but is now stabilizing, per the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS). This shift lower is consistent with a somewhat cooler labor market, which is a positive sign for future inflation readings.

In May, the number of open jobs for the economy increased slightly to 8.14 million. This is smaller than the 9.31 million estimate reported a year ago. NAHB analysis indicates that this number must fall below 8 million on a sustained basis for the Federal Reserve to feel more comfortable about labor market conditions and their potential impacts on inflation. With estimates near 8 million now, this suggests rate cuts lie in the months ahead if current trends hold.

While the Fed intends for higher interest rates to have an impact on the demand-side of the economy, the ultimate solution for the persistent, national labor shortage will not be found by slowing worker demand, but by recruiting, training and retaining skilled workers.

In May, the number of open construction sector jobs was effectively unchanged at 339,000. Earlier in the Spring, in March, the number of open construction sector jobs shifted lower from 456,000 in February to 346,000. Elements of the construction sector slowed as higher rates for longer held, most notably multifamily development. This slowing has somewhat reduced demand for construction workers, lowering the job opening count for the construction industry. The open job count was 363,000 a year ago during a period of weaker single-family home construction. 

The construction job openings rate increased to 4.0% in May, a somewhat lower reading than in February (5.3%). The job openings rate has trended lower as multifamily and single-family construction has slowed.

The layoff rate in construction edged lower to 1.8% in May. The quits rate in construction ticked up in May to a 2.4% rate.