JOLTS Data: Construction Hiring Dips in August, but Sector Job Openings Rise


August data from the Job Openings and Labor Turnover Survey (JOLTS) indicate construction hiring slowed in August after an elevated July. However, construction sector job openings rose for the month. Nonetheless, the pace of hiring remains lackluster, especially given the strength in housing construction activity for 2012.

For the economy as a whole, the August JOLTS data reveal that the hiring rate stood at 3.3% of total employment, which is basically unchanged over the last year. The national hiring rate has now been in a 3.2% to 3.4% range for the last 13 months. The job openings rate (the red line below) was unchanged for August at 2.6%. The openings rate has now been in the 2.5% to 2.7% range for nine months.

From 2009 to the end of 2011, the openings rate roughly moved along an increasing trend. However, this trend  appeared to slow for 2012. Moreover, the hiring rate has remained flat for about a year. All told, these conditions reflect an economy having trouble expanding employment.

The ongoing weakness in hiring has several potential explanations. 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. Another explanation is that policy uncertainty, for example from the impending fiscal cliff, is holding back employers from adding workers.

For the construction sector, the August JOLTS data indicate that hiring slowed for the month. Construction hiring reached a total of 308,000 for the month of August, the lowest pace since April. However, August marks the fourth month in a row of hiring in the construction sector above a 300,000 level.


After two strong months of hiring rates (June and July (6.4% and 6.5% respectively), the rate for August dipped to 5.6%. Per the JOLTS data, net hiring for the construction sector remains negative, with 20,000 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.

Jobs openings in construction increased from 67,000 open positions in July to 82,000 open positions in August. The openings rate consequently increased from 1.2% to 1.5%, the highest rate since the spring.

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 September (the employment count data are published one month ahead of the JOLTS data) indicate that total employment in home building stands at 2.033 million, broken down as 565,000 builders and 1.469 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 1.417 million. And according to the BLS data, over the last 12 months, the home building sector has added only 23,000 net positions.

However, recent data revisions suggest construction hiring could have been stronger over the period of April 2011 to March 2012.  We will know for sure in February when the final benchmark revision is published.

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