Is volatile US construction job data a sign of sinking demand?

A group of construction workers erect scaffolding. (Image: Adobe Stock)

The 274,000 reported job openings on the last day of March was also 17,000 less than the same time last year, according to Associated Builders and Contractors’ (ABC) analysis of data from the US BLS’ “Job Openings and Labor Turnover Survey” (JOLTS).

The survey defines a job opening as any “unfilled position for which an employer is actively recruiting.”

“Construction job openings plunged in March, falling to the lowest level since October 2020,” confirmed ABC Chief Economist Anirban Basu.

Is labour volatility a sign of weakening demand?

In this case, Basu doesn’t think so.

“While there are many headwinds facing the industry, including the prospect of higher-for-longer interest rates, this dismal number likely reflects a statistical aberration rather than a legitimate decline in demand,” he said.

US construction industry job openings and labour turnover data for March 2024. (Source: US Bureau of Labor Statistics)

The nearly 40% reduction, while sizable, may also not reflect seasonal hiring patterns. The data was not seasonally adjusted.

“We have seen this kind of volatility in the JOLTS data before; construction job openings also plunged last March,” said Basu. “Which is to say, on a year-over-year basis, openings are only down modestly.

“Accordingly, these data should not be viewed as a sign of an industry slowdown, at least not without another month or two of data to corroborate,” he added.

Fewer construction job openings, but fewer unemployed

ABC also released analysis the BLS’ unemployment data, which shows that more than half of the country’s states saw a dip in unemployment rates in March compared to year-over-year data.

The March 2024 national construction unemployment rate was 5.4%, ABC said, which is down 0.2% from the same period last year. Analysis found 29 states had lower unemployment rates over the same period from 2023, two states were unchanged, and 19 states were higher. This data was also not seasonally adjusted.

Payroll construction employment was 275,000 higher compared to last year, ABC said.

Since February 2022, seasonally-adjusted construction employment has exceeded its pre-pandemic peak of 7.6 million and, as of March 2024, seasonally-adjusted payroll construction employment stood at 8.2 million.

Construction job openings rate and quits rate graph from March 2012 to March 2024. (Source: US Bureau of Labor Statistics)

“In March, every state had lower estimated construction unemployment rates than in February,” said ABC. “The last time that all 50 states had lower rates than in the previous month was in May 2018.”

Even still, 31 states had lower construction unemployment rates compared to March 2019 (pre-pandemic) and 19 states had higher rates, which ABC said illustrates that “relative tightness” remains in the US construction labour market.

“Despite elevated interest rates, construction activity and employment continue at a healthy pace,” said Bernard Markstein, president and chief economist of Markstein Advisors, who conducted the unemployment data analysis for ABC. “Builders are hiring as they seek to replace retiring workers and anticipate winning future work.

“Non-residential construction activity and employment continue to benefit from federal funding and tax incentives for manufacturers, and funding for state and local infrastructure projects is strong.”