Job openings in the construction labor market rebounded in February after a sharp decline in January. The count of open jobs increased from a revised reading of 283,000 in January to 412,000. While the January point remains an outlier, the overall trend of the data suggests construction sector job openings are cooling as the housing market slows, according to an analysis by the NAHB.
The count of open, unfilled jobs for the overall economy declined again in February, falling to 9.9 million, after an 11.2 million reading in December, which was the highest level since July, and 10.6 million in January. The count of total job openings should fall in 2023 as the labor market softens and the unemployment rises. From an inflation perspective, ideally the count of open, unfilled positions slows to the 8 million range in the coming quarters as the Fed’s actions cool inflation.
While higher interest rates are having an impact on the demand-side of the economy, the ultimate solution for the labor shortage will not be found by slowing worker demand, but by recruiting, training and retaining skilled workers.
Despite the weakening that will occur in 2023, the housing market remains underbuilt and requires additional labor, lots and lumber and building materials to add inventory. Hiring in the construction sector ticked down to a still solid 4.7% rate in February. The post-virus peak rate of hiring occurred in May 2020 (10.4%) as a post-covid rebound took hold in home building and remodeling.
