Builders had 71K fewer job openings in June, a 17.5% drop from May.
There were 71,000 fewer job openings in the construction industry, a 17.5% drop from May, as rising debt costs and an economic slowdown increasingly crimp demand.
“Demand for workers is clearly fading due to rising borrowing costs, increasingly pervasive pessimism and growing risk of recession,” said Anirban Basu, chief economist for Associated Builders and Contractors (ABC), in an analysis of new data from the Bureau of Labor Statistics.
According to the BLS monthly Job Opening and Labor Turnover Survey (JOLTS), there were 334,000 open jobs across the construction industry in June. Down from 405K in May.
In a troubling sign that the perfect storm of construction issues that have delayed CRE deliveries in the past year—including supply-chain disruptions and a labor shortage—may not be alleviated by slackening demand, construction workers still quit their jobs in June at a faster rate than they were laid off or fired.
The total construction hires in June, 346,000, barely outpaced the 317,000 job separations in the sector, which always has a relatively high turnover rate. The total number of hires in June represents a decline of 3.6% from the May total of 359K.
This is the 16th consecutive month that quits—a.k.a. the Great Resignation—outpaced or equaled layoffs and discharges.
“What had been an economy beset largely by issues of supply is now becoming one faced with both supply chain issues and weakening demand for goods and services,” Basu said.
“While debate regarding whether or not the United States is in recession rages on, one thing appears clear: the US economy is poised to slow,” he added.
The JOLTS survey defines a job opening as any unfilled position for which an employer is actively recruiting.
According to Basu, the increasingly gloomy economic picture is diminishing contractor profit margin expectations. ABC’s monthly Construction Confidence Index (CCI), which surveys builders’ sales expectations, profit margin expectations and staffing level expectations declined in June in all three categories.
The CCI for sales dropped to 58.3 from 60.0 in May; the profit margin CCI dipped to 49.4 from 50; and the staffing CCI dropped to 59.6 from 62.8.
“Several months ago, there was conjecture that contractors were generally too upbeat regarding their collective future. Increasingly, the data suggests that they were,” Basu said, in a release issued with June CCI.
“[For months], many contractors reported surging backlog and an ability to pass along hefty cost increases to project owners. For months, contractors expected sales, employment and margins to expand,” Basu said.
“Our most recent survey indicates that, to secure work and to induce project starts, a growing fraction of contractors is having to trim margins,” he said.
