Construction Employment Update: Unfilled Jobs

The count of construction sector job openings in recent months is at levels last seen in 2008 according to government employment data. While the increase of unfilled positions in 2013 is consistent with the uptick in construction sector activity, particularly for home building, the data reflect only modest increases in total employment thus far. The rise in the count of open positions is thus consistent with reports of local labor shortages.

For the construction sector, Job Openings and Labor Turnover Survey (JOLTS) data from the Bureau of Labor Statistics (BLS) indicate that gross hiring was flat, falling from 309,000 to 308,000 from June to July. The hiring rate, as measured on a 3-month moving average basis, was also effectively unchanged, rising from 5.2% to 5.3%. The pace of construction hiring has slowed since the end of 2012.

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Consistent with reports of some labor shortages for builders, the number of open, unfilled positions in the construction industry remains at levels last seen five years ago. The number of unfilled positions in the sector for July (100,000) marks six out of the seven most recent months for which this total has equaled or exceeded 100,000. Successfully filling open positions with qualified workers is a top concern for home builders in 2013.

The July job openings rate (open positions measured as a percentage of current employment) for construction was 1.7%. Measured as a three-month moving average, the openings rate (the blue line above) has staged a noticeable rise since September 2012, although the growth in the open rate has slowed since February.

Combined with a declining sector layoff rate (non-seasonally adjusted), charted as a 12-month moving average in the graph above, the uptick in open positions since 2012 suggests more construction hiring in the months ahead – if firms can find workers with the right skills.

Monthly employment data for August 2013 (the employment count data from the BLS establishment survey are published one month ahead of the JOLTS data) indicate that total employment in home building stands at 2.146 million, broken down as 583,000 builders and 1.562 million residential specialty trade contractors.

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According to the BLS data, over the last 12 months, the home building sector has added 98,000 jobs. Since the point of peak decline of home building employment, when total job losses for the industry stood at 1.466 million, 162,000 positions have been added to the residential construction sector.

While employment growth for the sector is not expected to occur at rates seen for the expansion in overall building activity, the current level of improvement for building employment remains a puzzle. This small amount of job creation could be due to increased hours for existing workers, but if true, this is not a sustainable situation. Expected increases in building should lead to further growth in residential construction employment over the course of the year. Thus far in 2013, home building employment is averaging monthly growth of about 8,500 positions.

For the economy as a whole, the July JOLTS data indicate that the hiring rate was unchanged at 3.2% of total employment. The hiring rate has been in the 3.1% to 3.4% range since January 2011. The job openings rate was unchanged fell from 2.8% in June to 2.6% in July, the lowest rate since January 2013.

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