Eye On Housing
April data from the Job Openings and Labor Turnover Survey (JOLTS) confirm the labor market experienced a slowdown during March and April, including a deceleration in construction sector hiring. The theories explaining this slowing include unusually warm weather that accelerated economic activity at the expense of future months and more ominous structural explanations related to broader macroeconomic weakness.
Overall, the data suggest that the early growth in net construction hiring in 2012 has come to a near stop, but hope remains that it will pick up again later in this year given rising housing permit totals. But for the short-term, we know that the employment data for May was bad – with only 69,000 net jobs created. Thus, the future May JOLTS report will likely reflect bad news as well.
For the economy as a whole, today’s April JOLTS data reveal that hiring rates fell to 3.1%, the lowest rate since the middle of last year. In fact, April was the first month of a declining hiring rates in some time, after 8 months of general increases from 3.1% to 3.3%. The job openings rate (the red line below) fell from 2.7% to 2.5%, the lowest rate since October of last year. Despite these declines, the overall trends remain the same. Namely, the openings rate appears to be moving along a sluggishly increasing trend, while the hiring rate remains flat. We believe these facts are related to the housing market’s ongoing challenges and the ability of workers to move to locations where employers are hiring.
For the construction sector, the April JOLTS data indicate more declines in hiring, falling from 318,000 hires in February to 286,000 in March and then 281,000 in April. March and April now stand as the first months in over a year for which the level of hiring for the construction sector was below 300,000.
The number of open positions in the construction sector remained steady in April at 90,000 positions, after a total of 92,000 openings in March. These are the highest tallies of open positions for the construction sector since last August and suggest some optimism for construction hiring in the future.
For the first four months of 2012, per the JOLTS data, net hiring for the construction sector has become weaker relative to hopes at the beginning of the year. Net hiring for the construction sector stands at only 17,000 positions.
Narrowing in on the residential construction sector, per the BLS Current Employment Statistics data, total employment for following month of May stands at 2.018 million (565,000 builders and 1.453 million in associated trades). Total net job losses from the peak of employment (April 2006) increased in May to 1.43 million.
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