Number of Unfilled Construction Jobs Rose in August

August saw a rise in the number of unfilled construction sector positions according to the better-late-than-never BLS Job Openings and Labor Turnover Survey (JOLTS), which was delayed due to the government shutdown.

While the increase of unfilled positions in 2013 is consistent with the uptick in construction sector activity, particularly for home building, the data continue to 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, gross hiring declined, falling from 307,000 to 298,000 from July to August. The hiring rate, as measured on a 3-month moving average basis, also posted a drop, falling from 5.4% to 5.2%. The pace of construction hiring has slowed since the end of 2012, and this trend has continued into the fall of 2013.

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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 August (111,000) marks six out of the eight 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 August job openings rate (open positions measured as a percentage of current employment) for construction was 1.9%. 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. This rise occurred at the same time as the hiring rate slowed.

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, if modest, construction hiring in the months ahead – if firms can find workers with the right skills. The recent soft patch in some construction activity may also reduce hiring.

Monthly employment data for September 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 2.151 million, broken down as 587,000 builders and 1.5625 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 99,000 jobs. Since the point of peak decline of home building employment, when total job losses for the industry stood at 1.466 million, 168,000 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 8,300 positions.

For the economy as a whole, the July JOLTS data indicate that the hiring rate was unchanged at 3.3% of total employment. The hiring rate has been in the 3.1% to 3.4% range since January 2011. The job openings rate rose from 2.7% to 2.8%, which matches the highest such rate since 2008.



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