The count of open, unfilled jobs for the overall economy increased in December, rising to 11 million, the highest level since July. This was a surprise rise, as noted by many analysts, particularly given a growing chorus of corporate hiring freezes and job cuts. For now, the December data appears to be more noise than signal, although certainly that conclusion could reverse given data for January.
Ideally, the count of open, unfilled positions slows to the 8 million range in the coming quarters as the Fed’s actions cool inflation. While higher interest rates are having an impact on the demand-side of the economy, the ultimate solution for the labor shortage will not be found by slowing demand, but by recruiting, training and retaining skilled workers.
The construction labor market saw a similar increase for job openings in December as the housing market cools. The count of open construction jobs increased from 331,000 to 413,000 month-over-month. Despite a declining trend, the December reading is actually higher than the estimate from a year ago (359,000), a reminder of the persistent challenges of the skilled labor crisis in construction.
The construction job openings rate increased to 5% in December. The data series high rate of 5.5% was recorded in April 2022. Despite recent data noise, it still appears that the count and rate of open, unfilled positions for the construction industry peaked in 2022 and is now trending lower as the housing market slows.
The housing market remains underbuilt and requires additional labor, lots and lumber and building materials to add inventory. Hiring in the construction sector increased to a 4.6% rate in December. The post-virus peak rate of hiring occurred in May 2020 (10.4%) as a post-covid rebound took hold in home building and remodeling.
Construction sector layoffs ticked up to a 2% rate in December. In April 2020, the layoff rate was 10.8%. Since that time, the sector layoff rate has been below 3%, with the exception of February 2021 due to weather effects. The number of layoffs in construction increased to 153,000, compared to 133,000 a year ago.
The number of quits in construction in December (125,000) was significantly lower than the measure a year ago (161,000).
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 the ongoing macro slowdown.