JOLTS Data: Construction Hiring Continues Small Summer Rebound


July data from the Job Openings and Labor Turnover Survey (JOLTS) suggest that construction hiring continued a slight rebound for the months of July and August. While total hiring became more positive after weak months in the spring, the pace of hiring remains lackluster, especially given the strength in housing construction activity for 2012.

For the economy as a whole, the July JOLTS data reveal that the hiring rate stood at 3.2% of total employment. The national hiring rate has now been in a 3.2% to 3.4% range for the last 12 months. The job openings rate (the red line below) remained at 2.7%, a rate at which it has now stood for four out of the five last months.

The overall trends have remained constant over recent months. Namely, the openings rate appears to be moving along a long-run increasing trend, while the hiring rate remains relatively flat. This suggests the economy is having problems adding jobs by filling open positions.

There are two commonly cited explanations for this situation. One, challenges in housing markets are preventing workers from relocating to labor markets with open positions. However, this “house lock” effect was recently challenged by a paper from economists at the New York Federal Reserve. A second possible explanation is a skills mismatch between available workers and open positions. This explanation is also hotly debated among various proponents of structural or cyclical explanations of post-Great Recession unemployment.

For the construction sector, the July JOLTS data indicate that hiring continued its pick up after slow months of March and April. Construction hiring reached a total of 362,000 for the month of July, the highest level of hiring since June of 2011.

The construction hiring rates for June and July (6.4% and 6.6% respectively) are the highest rates in over a year. However, per the JOLTS data, net hiring for the construction sector remains negative, with 19,000 net positions lost for the sector for 2012 year-to-date. This drop off is due to weak hiring in the spring, as well as relative weakness in the nonresidential sector. However, total separations in construction (layoffs, quits and other separations) were also up in July.

We’ve noted for the last few months that net lost jobs in construction for 2012 is hard to reconcile with increases for 2012 in construction spending and other measures of activity. While it is true that weakness in construction employment is due in part to nonresidential construction, other Bureau of Labor Statistics data indicate that home builders have not added many jobs in 2012.

The monthly BLS net employment count for August (the employment count data are published one month ahead of the JOLTS data) indicate that total employment in home building stands at 2.031 million, broken down as 564,000 builders and 1.467 million residential specialty trade contractors.

Net job losses at the low point of home building employment (December 2010) totaled 1.46 million. Current net job losses are 1.419 million. And according to the BLS data, over the last 12 months, the home building sector has added only 24,000 net positions.

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