Builders Point Out Silver Lining in Fewer Job Openings

The Bureau of Labor Statistics monthly Job Openings and Labor Turnover Survey (JOLTS) for May showed fewer job openings than analysts had expected, 5.67 million (a seasonally adjusted annual number), well below the lowest estimates of 5.90 million and the second lowest number of the year.  It wasn't all bad news however.

JOLTS balances job openings with hirings, and those rose by 8.3 percent for the month to an annualized rate of 5.72 million, a new record.  Econoday said this indicates that employers re catching up with hiring and could indicate the market is tightening, good news for wages.

So why are we mentioning this?  Because the count of unfilled jobs in the construction sector also declined in May to 154,000 - lower than a year earlier.   At the peak, last July, there were 238,000 construction openings.

The National Association of Home Builders (NAHB) has repeatedly cited a shortage of skilled labor as one reason homebuilding has lagged other housing industry indicators.  The overall open position rate (job openings as a percent of total employment) in the JOLTS report was 2.2 percent; NAHB says on a smoothed twelve-month moving average basis, the rate for the construction industry, while still elevated, declined to 2.6 percent.

NAHB economist Robert Dietz, writing in NAHB's Eye on Housing, said, "The overall trend for open construction jobs has been increasing since the end of the Great Recession. This is consistent with survey data indicating that access to labor remains a top business challenge of builders.  However, recent data indicate a slowing in the count of unfilled construction jobs, albeit at levels higher prior to 2016.

"The construction sector hiring rate, as measured on a twelve-month moving average basis, increased slightly to 5.2% in May. The twelve-month moving average for layoffs was steady (2.7%), remaining in a range set in 2014. The recent increase in the quits rate, an indicator of labor market churn, slowed in May to a 2% rate."

Dietz calls the overall construction market "tight" even as it continues to expand. There were 115,600 job openings added by home builders and remodelers over the last 12 months and employment in the industry has increased by about 713,000 persons from its recession low. "As housing starts continue to increase, more workers will be needed in the residential construction sector.