Good news for construction workers: they are hired.
Construction jobs rose by 23,000 in June, including 800 in housing, the Labor Department said on Friday. In the last year, construction jobs have increased by an average of 15,000 per month.
“The construction market is hot,” Richard Branch, chief economist at Dodge Construction Network, told Yahoo Finance. “Just another sign that we’ve bottomed out here… and better days are on the way.”
The hiring also underscores the recovery in the new home market, which has boosted builders’ confidence enough to push projects through. It also shows that many homeowners are modernizing their properties rather than selling them.
Construction workers prepare a recently poured concrete foundation in Boston on Friday, March 17, 2023. (AP Photo/Michael Dwyer, file)
The June report shows that residential jobs are up 11% from pre-pandemic levels, while non-residential jobs increased by just 1.8%. Both have increased monthly.
This is in line with previous data showing that new construction and permits for single and multi-family homes rose in May and new home sales continued to surprise on the upside.
“The construction industry is very interest rate sensitive, so many were expecting job growth to collapse,” Odeta Kushi, deputy chief economist at First American, told Yahoo Finance. “However, new construction was aided by the lack of existing housing stock.”
According to the National Association of Realtors, May’s home inventory was the lowest since records began this month, after it reported that pre-owned home sales fell 2.7% in May, citing inventory concerns clarified.
“The American dream of home ownership has been a challenge for younger adults. High mortgage rates along with a lack of housing stock have been the main obstacles,” NAR chief economist Lawrence Yun wrote after the job report was released.
Homeowners, most of whom have mortgage rates well below the prevailing market average of 6.81%, have been reluctant to sell, losing out on this low interest rate. Instead, many are converting their current homes.
The story goes on
This was supported by the job data. The fastest monthly clip came from homebuilders, which includes workers with skills such as concrete pouring, site preparation, plumbing, painting and electrical work, creating 10,000 jobs.
“With existing homeowners locked into their home’s rates and not enough homes on the market, consumers may choose to renovate their own home rather than opting to buy a new home,” added Kushi. “And it takes more hammers at work to renovate houses.”
However, getting those extra hammers is a constant struggle. According to JOLTS, there were 366,000 vacancies in construction in May. That’s 19,000 more posts than a month ago.
Monthly hires increased from 357,000 to 379,000, resulting in 22,000 new hires per month. At the same time, the ratio of new construction hires to vacancies – a measure of how easily employers can pass those vacancies on to new employees – has risen slightly, suggesting that hiring is somewhat easier.
In addition, layoffs among construction workers rose by 57,000 while the number of layoffs declined, suggesting that “the labor market in the construction sector remains tight as demand for new construction picks up,” Kushi said.
“Labour shortages, particularly in the construction sector, are affecting the ability of small construction companies to attract labor,” Branch said. “We continue to see rising building material prices. This also affects the margins in the construction industry and makes it particularly difficult to build affordable single-family homes.”
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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