Rising Number of Open Jobs in Construction

The number of open, unfilled construction sector positions increased in November and was revised up for October.

According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the number of open construction sector jobs for November (on a seasonally adjusted basis) rose to 145,000. The November level marks the 3rd highest total of unfilled jobs in construction during the post-recession period.

On a three-month moving average basis, the open position rate for the construction sector increased to 2.13% in November. Over the last year, the open construction jobs rate has typically been higher than the rates that were experienced during the 2001-2003 period prior to the building boom.

The sector hiring rate, as measured on a three-month moving average basis, declined in November to 5%, after a significant rise during the summer.

Monthly employment data for December 2014 (the employment count data from the BLS establishment survey are published one month ahead of the JOLTS data) indicate that total employment in home building/remodeling stands at 2.343 million, broken down as 677,000 builders and 1.666 million residential specialty trade contractors.

In December, home builders and remodelers added 13,500 jobs to the residential construction sector on a seasonally adjusted basis. Over the last 12 months, the industry has created 132,000 jobs.

Since the low point of industry employment following the Great Recession, the residential construction industry has gained 359,500 positions, although employment remains 1.107 million lower than the peak level seen in early 2006. Employment growth for the sector has been steady recently, adding on average just a little more than 12,000 jobs per month over the last six months.

In December, the unemployment rate for construction workers declined to 7.5%. The unemployment rate for the construction occupation has been on the decline since reaching a peak rate of 22% in February 2010.

For the economy as a whole, the November JOLTS data indicate that the hiring rate declined slightly, after revisions, to 3.6% of total employment. The hiring rate had been in the 3.1% to 3.5% range since January 2011 but rose above 3.5% for the first time in September. The overall job openings rate ticked up to 3.4%, matching the highest rate of open jobs for the overall labor market since 2007 (3.4%).

These recent labor market indicators signal good news ahead for job creation and housing demand.

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Where is the Housing Market Headed?

Sustained job growth, affordable home prices, low mortgage rates and a rebound in consumer, small business and builder confidence will help the housing market continue to show modest improvement and better production levels in the months ahead, according to NAHB Chief Economist David Crowe. Watch this video to get the full forecast.

How the Housing Recovery Is Juicing Job Numbers

An important reason why the economy has not recovered from the Great Recession as quickly as in prior economic downturns is that a traditional leader of economic growth – housing – has been stifled.

In recent months however, housing has returned to contributing to economic growth, with home building alone responsible for 20 percent of GDP growth in the last six quarters.

And when it comes to job growth and housing, it is often the change in payroll employment for home builders and residential contractors that attracts the most attention. As of April 2013, total home building employment (builders and contractors) stood at about 2.1 million according to the Labor Department, growing off of cycle lows. And just over the last year such employment is up almost 100,000 jobs.

While building employment is substantial, there is a significant amount of other housing-related employment, whether connected to building, furnishing a house, or other housing needs.

For example, there are firms – recognized as “associate members” in local home builder associations – who enable builders to build, providing a bevy of products and services, including lumber sales, windows, appliances or financial services. These firms tend to be small businesses spread out across the country.

Housing-Related Employment. (Bureau of Labor Statistics)

And of course, these beneficial economic impacts are not limited to building. As the chart above indicates, accounting for housing related retail sales, finance, leasing, property management, service provision and even furniture and housing appliance manufacturing and logging adds more than 2.7 million jobs to the housing employment base of approximately 5 million.

As housing markets continue improving across the nation, these sectors are set for job growth. As home sales increase, housing-related spending will increase. Prior research indicates that the typical buyer of a newly built home will spend $7,400 more than a non-moving household in the first two years after purchase of the residence on furniture, household furnishing, remodeling and appliances. Similarly, a typical buyer of an existing home will spend $4,000 more.

Given the considerable amount of pent-up housing demand, particularly among younger Americans, the ever-improving housing market should continues its role as a provider of a virtuous circle. Growing housing demand creates jobs across a wide array of sectors and regions, which in turn unlocks additional housing demand.