Construction Job Openings Cool at the Start of 2014

April 8, 2014

The number of open, unfilled construction sector jobs declined at the start of 2014, according to the BLS Job Openings and Labor Turnover Survey (JOLTS). While the February open rate is the fifth highest since the end of the recession, the count of open construction jobs fell during a period when unseasonably cold weather took a toll on numerous parts of the economy.

For the construction sector, monthly gross hiring declined slightly, falling on a seasonally adjusted basis from 281,000 to 273,000 from January to February. Over the same period, the hiring rate, as measured on a 3-month moving average basis, fell from 4.7% to 4.5%.

JOLTS_Feb 2014 data

Measured as a three-month moving average, the construction openings rate (the blue line above) has declined since December, inclusive of a significant downward revision for the preliminary January data. As of February 2014, the three-month moving average stood at 2%, a rate higher than any data reporting prior to October 2013 but lower than the December 2013 peak of 2.33%.

Two other changes in the construction sector are worth noting. First, the layoff rate for the sector (graphed above as a 12-month moving average) has continued to fall. Second, the sector hiring rate has fallen noticeably since the fall of 2013. The trend lines over the last two years – a falling hiring rate, an increasing opening rate, and a declining layoff rate – are consistent with some construction firms having trouble contracting with workers for specific projects. However, future employment reports will indicate whether recent hiring weakness is mostly due to weather effects or reflects new baselines for construction activity.

Monthly employment data for March 2014 (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 2.242 million, broken down as 650,000 builders and 1.592 million residential specialty trade contractors.

res construction employment

According to the BLS data, over the last year the home building sector has added 103,000 jobs. Since the point of peak decline of home building employment, when total job losses for the industry stood at 1.466 million, 257,500 positions have been added to the residential construction sector. As of March, over the last six months the home building and remodeling industry has added on average more than 10,000 jobs per month.

For the economy as a whole, the February JOLTS data indicate that the hiring rate was constant at 3.3% of total employment. The hiring rate has been in the 3.1% to 3.4% range since January 2011. The current overall job openings rate (2.9%) has been in the 2.7% to 2.9% range since the start of 2013.


Residential Construction Employment Up 9,100 in March

April 4, 2014

Solid job growth for home builders and remodelers was recorded in March, according to data from the Bureau of Labor Statistics (BLS). The residential construction industry added 9,100 jobs for the month on a seasonally adjusted basis, 3,100 working for builders and 6,000 residential specialty trade contractors.

res constr employment

 

Total industry employment now stands at 2.242 million, broken down as approximately 650,000 builders and 1.592 million residential contractors. For 2014, the residential building industry has been averaging 10,000 jobs created per month. Over the last year, 103,000 jobs were created, and the home building workforce has gained 257,500 jobs since the post-recession low point set in January 2011.

home building employment share

Over the last year and a half, the share of jobs being created by the sector has outpaced the share of industry employment. For example, in March 2014, industry employment represented 1.63% of total nonfarm jobs. However, residential building was responsible for 4.74% of total jobs created. Home building typically provides an outsized boost to economic growth and job creation as a recession ends. In the last year or two, home building has finally assumed this typical economic role.

Overall, the establishment survey from the BLS indicated that 192,000 jobs were created on a seasonally adjusted basis in March. This was slightly below expectations, but on net a positive indicator for the economy. Previous months reporting was also revised up by 37,000 jobs.

The March data is also consistent with the claim that unseasonably cold weather in much of the U.S. held back economic growth during the end of 2013 and the start of the new year.

The separate household survey reported that the unemployment rate held steady in March at 6.7%. In a positive sign for household formations and housing demand, the labor force participation rate increased 0.2 percentage points to 63.2%. The size of the labor force increased by 503,000 in March.

 


Construction Job Openings Rate at Second Highest Level Since 2007

March 11, 2014

The number of open, unfilled construction sector jobs increased 38% from 113,000 in January of 2013 to 156,000 in January of 2014, according to the BLS Job Openings and Labor Turnover Survey (JOLTS). The January count of open jobs in the sector is the second highest since May 2008.

While the recent increase in unfilled positions is consistent with the increase in construction sector activity, particularly for home building, the data continue to reflect only modest growth in total employment. The rise in the count of open positions thus matches reports of local labor shortages.

For the construction sector, monthly gross hiring increased somewhat, rising on a seasonally adjusted basis from 251,000 to 285,000 from December to January. Over the same period, the hiring rate, as measured on a 3-month moving average basis, fell from 5.1% to 4.7%. The pace of construction hiring slowed during 2013 compared to 2012 levels and this trend continued at the start of 2014.

cosntr labor market

Measured as a three-month moving average, the openings rate (the blue line above) has staged a noticeable rise since September 2012, with a brief pause during the middle of 2013. As of January 2014, the three-month moving average stood at 2.5%, a post-recession high. This recent increase in open positions occurred at the same time as the hiring rate began to fall.

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.

Monthly employment data for February 2014 (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 2.227 million, broken down as 648,000 builders and 1.579 million residential specialty trade contractors.

res constr employment

According to the BLS data, over the last year the home building sector has added 101,000 jobs. Since the point of peak decline of home building employment, when total job losses for the industry stood at 1.466 million, 243,000 positions have been added to the residential construction sector. As of February, over the last six months the home building and remodeling industry has added on average more than 8,000 jobs per month.

For the economy as a whole, the January JOLTS data indicate that the hiring rate was constant at 3.3% of total employment. The hiring rate has been in the 3.1% to 3.4% range since January 2011. The current overall job openings rate (2.8%) has been in the 2.7% to 2.9% range since the start of 2013.


The Employment Situation for February – Weather The Right Signals

March 7, 2014

The Bureau of Labor Statistics (BLS) released the Employment Situation report for February. The establishment survey showed payroll employment expanded by 175,000 in February and the prior two months were revised upward for a combined increase of 25,000. From the household survey, the unemployment rate reversed last month’s decline, rising back to 6.7% from 6.6% in January. The labor force expanded by 264,000, the number of employed persons increased by 42,000, and the number of unemployed persons rose by 223,000.

The return to more robust growth in February payrolls is a positive signal after the disappointing slowdown in December and January. Indicators from the household survey regarding missed work due to bad weather suggest that the February gain could have been larger absent winter storms during the month. These “missed” jobs could provide a boost to payroll growth in the March report.

The increase in the unemployment rate could be a blessing in disguise if it represents the beginning of more consistent growth in the labor force, drawing back discouraged workers who have given up the job search in recent years.

In any event the uptick in the unemployment rate will have no impact on the Federal Reserve’s pace of reductions in bond purchases. An expanding labor force will bolster the Fed’s confidence, rather than undermine it, that the recovery is proceeding, and the Fed will continue its measured reductions in the pace of bond buying at the upcoming March meeting.

Today’s report is not as strong as it might have been but still has plenty of positive signals.


The Essential Subcontractor

February 12, 2014

Subcontractors are an often over looked but essential part of the home building industry. Many outside the industry do not understand how large a part subcontractors have in the construction of a home. Home builders, as well as remodelers, typically subcontract a large portion of their construction work out to trade contractors who can more efficiently deliver individual pieces of the construction process. Specialized subcontractors perform much or even all of the actual labor.

On average, 25 subcontractors were used to build a single-family detached house in 2012 (according to the NAHB/Wells Fargo Housing Market Index July 2012 special questions). Larger builders are more dependent on subcontractors to build their homes. On average, builders who built more than 25 units used 32 subcontractors during 2012, compared to 23 for builders who built less than 25 units .

About 71 percent of those employed in the home building industry are subcontractors. Monthly employment data for January 2014 (the employment count data from the BLS establishment survey) indicate that total employment in home building stands at 2.231 million, broken down as 647,000 builders and 1.584 million residential specialty trade contractors. A full breakdown of subcontractors can be found in the following table:

                  Quarterly Census of Employment and Wages
           Residential Specialty Trade Contractors Employment

table

*Preliminary June 2013

During the past 40 years, the use of subcontractors significantly accelerated. In 2012, sixty-eight percent of home builders subcontracted 75 percent or more of the construction costs, whereas in 1959 less than half as many– 31 percent– subcontracted that percentage. A major reason for this trend is due in part to the increasing complexity, features, and amenities supplied with new homes.

Some jobs are more likely to be subcontracted out than other. More than 90 percent of builders always subcontract for security systems, HVAC, technology (structured wiring, home theater, etc), carpeting, electrical wiring, plumbing, masonry work, and fireplaces. Between 80 to 90 percent of builders reported they always subcontracted for drywall, foundations, concrete flatwork, kitchen countertops, roofing, ceramic tiles, wood flooring, and painting. For a full list of subcontractors see the following graph:

            Frequency Single-Family Builders Subcontracted Jobs
                          (On a scale of 1 to 5, 1=Never; 5=Always)

graph

Home remodelers also heavily rely on the labor of subcontractors.  According to special questions on NAHB’s Remodeling Market Index, a third of remodelers subcontracted out 75 percent or more of their work and, on average, used 18 subcontractors annually.


Wages in Home Building and Remodeling

February 12, 2014

Wages for most jobs in home building and remodeling typically exceed the median wage in the U.S., according to data from the Bureau of Labor Statistics Occupational Employment Statistics (OES) Survey.

In a previous analysis, we examined the kinds of jobs that exist in the residential construction sector.

Using the same 2012 BLS data, it is possible to track wages of employees in the industry (click the chart below for a more detailed view).  It should be noted that typical wages will vary greatly from area to area, so the following data are national medians – wages in your area may differ.

median wages_res construction_2012

The U.S. median annual wage in 2012 was $34,750. The chart above plots the medians for various occupations in the home building and remodeling sector (the single item above with no value did not have sufficient data). The OES survey defines employment as the number of workers who can be classified as full- or part-time employees. The following profile examines the Residential Building Construction industry group, which includes builders of for-sale and owner/contractor built single-family and multifamily housing, as well as residential remodelers.

The wage data presented in this post are for occupations within the home building and remodeling sector, as opposed to data for these occupations across all sectors of the economy. Annual wages are calculated, by the BLS, as the hourly wage paid on a 2,800 hour annual basis. Wages are measured on a gross pay basis, but certain bonuses and employer paid benefits are excluded.

The occupation with the highest wage in the industry is the legal profession, which has a median income of just a little more than $99,000. Managers, who constitute 9% of industry employment, had a median income of approximately $79,000 in 2012. Occupations with median wages in excess of the U.S. median represent approximately 80% of total employees.

median wages_construction occupation jobs_2012

Within the largest subsection of the industry (construction and extraction occupations – 64% of industry employment), a majority of the occupations again have median annual wages in excess of the U.S. median. The highest wage for this subsection is for construction supervisors, with an annual median wage of $56,500.

Carpenters, who make up the largest group (47% of the construction occupations and 30% of industry employment), had a median annual wage of $39,940 in 2012.  This is 15% higher than the U.S. median annual wage.


Jobs in Home Building and Remodeling

February 11, 2014

Home building is an industry dominated by small businesses around the nation. Data from the Bureau of Labor Statistics (BLS) reveal the many job categories within the industry and their relative concentrations.

Previous NAHB research has examined the geographic scope of the building industry, as well industry surveys that present a census of builders and associated businesses.

BLS data from the 2012 Occupational Employment Statistics (OES) Survey allow reporting the roles workers play in home building. The OES survey defines employment as the number of workers who can be classified as full- or part-time employees. The following profile examines the Residential Building Construction industry group, which includes builders of for-sale and owner/contractor built single-family and multifamily housing, as well as residential remodelers.

Home building jobs_2012

Management jobs constituted approximately 9% of jobs in the residential construction industry, for a total of more than 48,000 positions. Office and administrative support made up the second largest category, which at just under 80,000 jobs represented 14% of sector employment.  Sales staff and business/finance roles each made up about 4% of home building business jobs, each contributing approximately 24,000 jobs.

Other jobs in home building, generally representing about 6% in combination, include architects, lawyers, designers, building/grounds maintenance staff, security guards, drivers, and IT staff (chart above corrected from earlier version for which this share was incorrectly reported).

Not surprisingly, the largest share of home building/remodeling employment is concentrated in construction and extraction jobs. For 2012, more than 363,000 jobs were in such fields.  The following chart provides a breakdown of these jobs.

Home building construction jobs_2012

Carpenters make up almost half of construction/extraction jobs (47%), for a total of more than 171,000 jobs. The OES defines carpenters as workers who construct, erect, install, or repair structures made of wood. It also includes workers who install cabinets, drywall, siding, and insulation. Approximately 30% of carpenters nationwide are employed by the residential building construction sector.

Rounding out the construction segment of industry employment are construction laborers, worksite supervisors, brickmasons, stonemasons, carpet/tile installers, cement masons, equipment operators, drywall installers, electricians, glaziers, insulation workers, painters, plumbers, plasters, rebar workers, roofers, and sheet metal workers.

A follow-up post to this analysis examines wages for many of these industry jobs.


The Employment Situation for January – The Road to Nowhere

February 7, 2014

The Bureau of Labor Statistics (BLS) released the Employment Situation report for January. The report was disappointing overall but had a mix of good, bad and extenuating circumstances to keep the labor market outlook in limbo for a second month.

The establishment survey showed payroll employment expanded by 113,000 in January, following an upwardly revised 75,000 increase in December. The average monthly gain was 205,000 over the prior 12 months. These two months were the weakest since the spring slowdown in 2012, but were likely depressed by extreme weather.

According to the household survey, the unemployment rate dipped to 6.6% from 6.7% in December and 7.0% in November. The January decline was based on an increase of 616,000 in the number of employed persons that outpaced an increase in the labor force of 499,000. Both developments, an expanding labor force and an even greater expansion in employed persons are positives. In contrast, the November to December decline was based on defections from the labor force outpacing gains in employed persons. The bulk of the decline in the unemployment rate from its peak has come from labor force defections, so the January figures are a bright spot in the report.

Average hourly earnings ticked up and the length of the workweek held its ground, adding some additional modest ambiguity to an otherwise disappointing report.

With all eyes on the Fed, and all Fed eyes on the monthly labor reports, today’s report sheds little light on the Fed’s next move. Being neither strong enough nor weak enough to force the Fed’s hand on the pace of withdrawing its monetary stimulus, today’s report leaves it to next month to determine whether the labor market is moving forward, backward or nowhere, and whether the Fed will follow.

blog emp 2014_01

 


Young Adults Living with Parents Up Sharply

February 4, 2014

New NAHB Economics research shows that the share of young adults ages 18 to 34 living with parents or parents-in-law increased sharply in the late 2000s. According to the most recent American Community Survey (ACS), one in three young adults ages 18 to 34, or more than 24 million, lived in homes of their parents or parents-in-law in 2012. By comparison, the 1990 and 2000 Censuses reported that only one in four young adults ages 18 to 34 lived with parents at that time.

The NAHB analysis shows that the biggest shift in the preferences of young adults to live with parents happened after 2005. This is particularly true for older young adults, ages 25 to 34, whose share living with parents was fluctuating around 12 percent from 1990 through 2005 and then quickly rose to exceed 19 percent in 2012 (see figure below). The younger cohort, ages 18 to 24, was more likely to live with parents in 1990, when more than half of these adults lived with parents, than in the early 2000s. However, by 2006 this share exceeded 50 percent again and grew to more than 57 percent in 2012.

YA_wp

Rising college enrollment among younger adults ages 18 to 24 helps explain their increased preferences for not leaving parental homes. The majority of adults in this age group, 52 percent, attended school or college in 2012, compared to 45 percent in 2000 and 43 percent in 1990. College attendance plays a less important role in the decision of older adults, ages 25 to 34, to stay at parents’ home. Less than 14 percent of adults in this older cohort were still in college or school in 2012, the comparable share in 1990 and 2000 was just slightly below, close to 12 percent.

For older, more experienced and better educated adults ages 25 to 34, the ability to find stable, higher-paying jobs plays an increasing role. As unemployment rates kept increasing in the late 2000s so did the shares of young adults living with parents. In 2000, the shares of unemployed in this age group were 7 percent among young adults living with parents and 4 percent among those living independently. By 2012, these shares reached 14 percent among adults living with parents and 6 percent among same age adults living independently.

The NAHB report also analyzes state unemployment rates and finds that, on average, states with larger increases in unemployment rates among young adults registered larger gains in percent of young adults living with parents. Even though unemployment rates started to decline in most states in 2011, shares of young adults living with parents remain stubbornly high and even increased in some states, suggesting that it takes longer for young adults to overcome the overall sense of economic instability, gain confidence and financial independence before leaving parents’ homes. This is particularly true for states hardest hit by the housing boom and bust, such as California and Florida, where percent of young adults living with parents continued to rise through 2012 despite improving job markets.

Young_adults

As of 2012, three Northeast states – New Jersey, Connecticut, and New York – register the nation’s highest shares of young adults ages 18 to 34 living with parents or parents-in-law – 45, 42 and 41 percent, respectively (see the map above). California and Florida – two of the states hardest hit by the housing boom and bust – follow with their shares just slightly under 40 percent. At the opposite end of the spectrum are the District of Columbia known for its relatively stable job market and North Dakota known for its oil booming economy – both registering shares under 20 percent.

Young adults ages 25 to 34 traditionally represent about half of all first-time home buyers. Their delayed willingness and ability to leave parental homes and strike out on their own undoubtedly contributed to suppressing housing demand further during the Great Recession. Declining shares of young adults living with parents in some states – Rhode Island, Montana, Wyoming, Maine, Delaware and New Mexico among others – could be one of the early signs that pent-up housing demand may finally start turning into realized housing demand.


The Employment Situation for November – The Fed’s Next Move Is Getting Closer

December 6, 2013

The Bureau of Labor Statistics (BLS) released the Employment Situation report for November. Payroll employment expanded by 203,000 and the prior two months were revised for a net increase of 8,000. The pattern in job growth is beginning to look like the substantial and sustained improvement in the labor market that the Federal Reserve has identified as the condition for beginning the process of winding down its bond purchases, popularly referred to as QE3, the third round of quantitative easing.

blog emp 2013_12

The unemployment rate declined to 7.0% from 7.3% in October, but this sharp decline should be viewed with some skepticism. The household survey treated furloughed federal government workers as unemployed in October and employed in November. The large number federal workers changing status combined with federal workers that were misclassified in October and large swings in and out of the labor force in October and November suggests the drop in the unemployment rate may be distorted by procedural problems related to the furlough.

Possible technical problems in the unemployment rate aside, recent growth in payroll employment may convince the Fed that the labor market is healthy enough to begin easing monetary stimulus. The earliest possibility is the December 17-18 FOMC meeting. Fed officials have been reluctant to set a specific date or take any date off the table. December is a possibility but not a certainty. One thing is clear, absent any significant setback in labor market conditions the winding down of QE3 will begin sooner rather than later.

 


Follow

Get every new post delivered to your Inbox.

Join 7,106 other followers