While the construction labor market remains tight, data indicates there is some stability related to the number of open, unfilled jobs in the industry. The number of overall unfill jobs in the construction sector increased by 5% in August, stabilizing after a record-high increase of 5.5% in April. For the overall economy, the count of unfilled jobs decreased by 10% in August, according to an analysis by the NAHB.
While the economy continues to face a critical skilled labor shortage, particularly in sectors like construction, the data is an additional argument in favor of the Fed slowing its projected path of increasingly restrictive policy following its November meeting. Higher interest rates are having an impact on the demand-side of the real economy, which will be reflected in inflation data in future months. The ultimate solution for the labor shortage, however, will not be found by slowing demand, but by recruiting, training and retaining skilled workers.
The count of open construction jobs ticked higher, rising from 353,000 in July to 407,000 in August. Despite recent slowing housing data, this is actually higher than the estimate from a year ago (362,000). The construction job openings rate moved higher, increasing to 5% in August after 4.4% in July. 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 remained solid at a 4.8% rate in August. The post-virus peak rate of hiring occurred in May 2020 (10.4%) as a rebound took hold in home building and remodeling.
