The count of open, unfilled jobs for the overall economy moved higher in April, rising to 10.1 million and complicating the June Federal Reserve decision. The higher job opening count for April increases the chance of another rate hike despite some speculation that May was the end of tightening.
The count of open jobs was 11.8 million a year ago in April 2022. The count of total job openings will fall in 2023 as the labor market softens and the unemployment rises, but the recent uptick complicates the inflation story. From a monetary policy perspective, 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 worker demand, but by recruiting, training and retaining skilled workers.
The construction labor market saw an increase for job openings in April, although we expect the broader lower trend to continue. The count of open construction jobs increased from a revised reading of 315,000 in March to 383,000 in April. These data points come after a data series high of 488,000 in December 2022. The overall trend is one of cooling for open construction sector jobs as the housing market slows and backlog is reduced, with a notable uptick in month-to-month volatility since late last year.
The construction job openings rate increased from 3.8% in March to 4.6% in April. The recent trend of these estimates points to the construction labor market having peaked in 2022 and is now entering a stop-start cooling stage as the housing market adjusts to higher interest rates.
Despite the weakening that will occur in later in 2023, the housing market remains underbuilt and requires additional labor, lots and lumber and building materials to add inventory. Hiring in the construction sector slowed to 4.5% in April after a 4.9% reading in March. 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 slowed to a 2% rate in April, after an elevated rate of 3% in March. 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.
Looking forward, attracting skilled labor will remain a key objective for construction firms in the coming years. 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.
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