The U.S. Bureau of Labor Statistics (BLS) released its latest job openings and labor turnover summary this week, showing that fewer employers are in need of workers. Job openings decreased by 617,000 to 8.7 million in October, marking the lowest point since March 2021. At the same time, the job openings rate decreased by 0.3 percentage point over the month and 1.1 points over the year, to 5.3%. This follows a November report showing that total nonfarm payroll increased by 150,000 while the unemployment rate remained under 4%.

Overall, this has economists optimistic about the possibility of a “soft landing” for the U.S. economy, following a period of higher interest rates and inflation. But the news could provide false hope for the construction industry, some experts suggest, as a labor shortage is set to worsen as the economy improves and sales for single-family housing pick up.

In construction, job openings decreased by 4,000 in October but remain up by 25,000 on a year-over-year basis, say officials for Associated Builders and Contractors (ABC). Meanwhile, some experts predict single-family construction could increase by as much as 9% next year.

While the labor shortage for builders improved slightly during late 2022 and at the start of 2023, “It wasn’t because we solved the issue,” Robert Dietz, chief economist for the National Association of Home Builders (NAHB), tells [DWM]. “It was just due simply to the fact that we have a smaller number of single-family homes under construction and the nonresidential construction sector slowed.”

The number of job openings in construction “fell into the low 300,000 range,” Dietz says, below its peak at 500,000. “My expectation is that number is going to go back up again, given our forecasts of single-family starts increasing,” he adds. “As the number of single-family homes actively under construction increases in 2024, the shortage of construction workers is going to tighten up. So it’s by no means eased. It’s just gotten a little bit cooler from really tight conditions.”

Other figures suggest that workers are at least staying put. Over the course of October, the number of total separations in the U.S. (including quits, layoffs and discharges) changed little, at 5.6 million. The rate of separations was unchanged at 3.6% for the fifth consecutive month.

At the same time, “While labor market tightness is easing across all economic segments, worker scarcity remains a pressing issue for the construction industry,” says ABC chief economist Anirban Basu. “On the last day of October, 5% of construction positions were unfilled, which is well above the 3.9% industry job opening rate observed in February 2020.”

According to ABC’s research, nearly half of contractors say they intend to increase staffing levels over the next six months. By the same token, “The lack of available workers will remain a headwind for the construction industry over the next several quarters,” Basu says—a headwind that will trickle down into the ongoing issue of affordability, Dietz adds.

Even with positive gains in the overall jobs market, the construction sector continues to clamor for labor, Dietz says. With around a 3.5-million-unit deficit in the market for new single-family homes and labor remaining scarce, “It’s going to be hard to make real inroads on the affordability issue, at least in 2024,” he says.

Nonetheless, NAHB is predicting growth in the single-family sector in 2024 of between 4% and 5%. Others are predicting as much as 9%.

Leave a Reply

Your email address will not be published. Required fields are marked *