Large Decline for Open Construction Jobs in March

Due to tightened monetary policy, the count of total job openings for the entire economy has trended lower over the last year. This is consistent with a somewhat cooler economy that is a positive sign for future inflation readings. However, the number of open jobs for the aggregate economy was relatively unchanged in March per the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS).

In March, the number of open jobs for the economy ticked down to 8.49 million. This is lower than 9.62 million reported a year ago. NAHB estimates indicate that this number must fall back below 8 million for the Federal Reserve to feel more comfortable about labor market conditions and their potential impacts on inflation.

While the Fed intends for higher interest rates to have 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. This is where the risk of a monetary policy mistake had some risk of arising. Good news for the labor market does not automatically imply bad news for inflation.

The number of open construction sector jobs posted a surprising decline in March, falling from 456,000 in February to just 274,000 in March. The count was 291,000 a year ago during a period of weaker home construction.  It’s possible this number will be revised higher in the next report. Or the decline could be a reflection of the ongoing weakness for apartment construction. Nonetheless, the construction job openings rate decreased to 3.2% in March, the lowest reading since the Fall of 2020.

The construction sector layoff rate declined to 1.8% compared to 3.6% a year ago. The hiring rate decreased to 4.1% in March, compared to 5.2% from a year ago.