Job Market in Construction is Slowing Down

According to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS), the number of open construction sector jobs continued to fall in July as home development slowed and loan rates rose.

However, this shift lower is consistent with a cooling general labor market, which bodes well for future inflation readings and interest rate expectations.

After revisions, the whole economy’s number of open jobs fell marginally in July, from 7.91 million to 7.67 million.

This is significantly lower than the 8.81 million estimate from a year ago.

Previous NAHB study indicated that this figure needed to fall below 8 million on a consistent basis for the Federal Reserve to be more confident about labor market conditions and their potential influence on inflation.

With predictions now noticeably lower than 8 million, the Federal Reserve is poised to slash interest rates.

As the Fed eases monetary policy, the demand for new building will rise.

Thus, the current soft construction labor readings will reverse in the next quarters.

This suggests that the existing skilled labor shortage is likely to endure in the future years.

In July, the number of open construction sector jobs fell sharply from 299,000 in June to 248,000.

Elements of the construction sector have stalled as interest rates remain high, most notably multifamily development.

This slowdown has lowered demand for construction workers, resulting in fewer job openings in the industry. The number of open jobs was 351,000 a year ago.

The construction job openings rate decreased to 2.9% in July, its lowest level since March 2020.

The number of single-family and multifamily residences under construction has decreased, resulting in a lower job openings rate.

This is a cyclical phenomenon that will most likely revert later in 2025.

The construction layoff rate rose to 2.1% in July from 1.3% in June, as the job market slowed.

In July, the quit rate in construction jumped to 2.1% from 1.6% the previous month. The rising layoff rate is consistent with a declining construction labor market.

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