Dive Brief:
- The U.S. construction industry recorded 383,000 unfilled jobs in April, up 68,000 from the previous month, according to Bureau of Labor Statistics data released Wednesday.
- In spite of multiple economic challenges, demand for construction workers remains elevated, said Anirban Basu, chief economist for Associated Builders and Contractors. “There are signs that higher interest rates have dampened demand for construction services, especially in the residential segment, yet contractors continue to struggle to fill open positions,” Basu said in a press release.
- In April, 4.6% of positions went unfilled, according to the BLS, a much higher rate than the pre-pandemic average rate of 2.2%, Basu noted. But that isn’t just a construction problem. Nationwide, there were 10.1 million job openings in April, which means there are roughly 1.7 jobs per unemployed American, according to Yahoo Finance.
Dive Insight:
The demand for more construction workers isn’t going anywhere, according to Basu. About three in five ABC members intend to increase their staffing in the next six months.
The Federal Reserve has responded to the tight labor market and inflation by continuing to raise interest rates at a rapid rate, and this latest jobs data could give the Fed reason to hike rates again.
“Not only did today’s job openings number [come] in much stronger than expected at 10.1 million, last month’s number was revised higher,” Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, told Yahoo Finance. While future jobs reports may tell a different tale, he said, “this is just one more sign the labor market is still hot and raises the pressure on the Fed to raise interest rates further this year.”
Eventually, the Federal Reserve’s continued cranking of interest rates may lead to a drop in worker demand, Basu said, but that probably isn’t around the corner.
“At some point, the combination of a year-plus of rising interest rates and tighter credit conditions will reduce demand for construction services,” Basu said. “For now, contractors remain busy and will continue to grapple with ongoing worker shortages.”