Downshift for Construction Job Openings

Due to slowing home construction and elevated interest rates, the count of open construction sector jobs shifted lower in June, per the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS). However, this shift lower is consistent with a somewhat cooler labor market, which is a positive sign for future inflation readings and the interest rate outlook.

In June, after revisions, the number of open jobs for the overall economy decreased slightly to from 8.23 million in May to 8.18 million. This is also smaller than the 9.13 million estimate reported a year ago. NAHB analysis indicates that this number must fall below 8 million on a sustained basis for the Federal Reserve to feel more comfortable about labor market conditions and their potential impacts on inflation. With estimates near 8 million now, this suggests rate cuts lie in the months ahead if current trends hold.

While the Fed intends for higher interest rates to have an impact on the demand-side of the economy, the ultimate solution for the persistent, national labor shortage will not be found by slowing worker demand, but by recruiting, training and retaining skilled workers.

In June, the number of open construction sector jobs shifted notably lower from 366,000 in May to 295,000. Elements of the construction sector have slowed as elevated interest rates held, most notably multifamily development. This slowing has somewhat reduced demand for construction workers, lowering the job opening count for the construction industry. The open job count was 414,000 a year ago.

The construction job openings rate fell to 3.5% in June, the lowest rate since March 2023. The job openings rate has trended lower as the number of single-family and multifamily residences under construction has declined. This is a cyclical effect that will likely reverse in 2025.

The layoff rate in construction edged lower to 1.6% in June from 1.8% in May. The quits rate in construction fell back to 1.5% in June from 2.3% in May. These readings indicate that the retreat for job openings represents a slowing of new position intended hiring in construction, rather than labor market churn.