The count of open, unfilled jobs for the overall economy declined in October, falling from 10.7 million open positions to 10.3 million. This represents a small decrease from a year ago (11.1 million), a sign the labor market is slowing in response to tighter monetary policy. The degree of this slowing will be critical for a potential downshift in the size of rate hikes from the Fed at future meetings.
Ideally, the count of open, unfilled positions slows to the 8 million range in the coming months as the Fed’s actions cool inflationary pressures. 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 decline for job openings in October as the housing market cools. The count of open construction jobs decreased from 423,000 to 371,000 month-over-month. The October reading is only slightly lower than the estimate from a year ago (392,000), a reminder of the persistent challenges of the skilled labor crisis in construction.
The construction job openings rate declined, falling to 4.6% from 5.2% in September. The data series high rate of 5.5% was recorded in April. Given the outlook for construction, it is possible that the count of open, unfilled positions for the construction industry has already peaked for this cycle.
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 weakened somewhat to a 4.3% rate in October. 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 fell back to a 1.7% rate in October. 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 fell back to 134,000, compared to 138,000 a year ago.
The number of quits in construction in October (189,000) was equal to the measure a year ago (189,000).
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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