The construction labor market is cooling off as economic activity slows in response to tighter monetary policy. However, the July data shows stability concerning the number of open, unfilled jobs in the construction industry. This trend will likely weaken during the second half of 2022 due to the policy decisions by the Federal Reserve.
The count of open construction jobs ticked higher, rising from 353,000 in June to 375,000 in July. Despite recent slowing housing data, this is actually higher than the estimate from a year ago (337,000).
The construction job openings rate inched higher, increasing to 4.6% in July after 4.4% in June. The data series high rate of 5.5% was recorded in April.
The housing market remains underbuilt and requires additional labor, lots and lumber and building materials to add inventory. However, the market is slowing due to higher interest rates. Nonetheless, hiring in the construction sector increased to a 5% rate in July. The post-virus peak rate of hiring occurred in May 2020 (10.4%) as a rebound took hold in home building and remodeling.
Despite slowing of building activity, construction sector layoffs remained low at a 1.9% rate in July. In April 2020, the layoff rate was 10.8%. Since that time however, the sector layoff rate has been below 3%, with the exception of February 2021 due to weather effects.
The number of quits in construction in July (193,000) was effectively flat relative to the measure a year ago (190,000).
Looking forward, attracting skilled labor will remain a key objective for construction firms in the coming years. However, while a slowing housing market will take some pressure off tight labor markets, the long-term labor challenge will persist beyond an ongoing macro slowdown.
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