Yahoo Finance Construction hiring misses expectations in November
Construction hiring in November disappointed.
Jobs in the residential construction sector declined 1,700 jobs in November from the month before, the Labor Department said on Friday. Overall, the construction sector gained 2,000 jobs in November, down from the prior three-month average of 21,000 and the weakest monthly growth since March.
The overall construction figure wasn’t in line with expectations, according to Nick Grandy, a construction and real estate senior analyst with RSM US.
"Today’s jobs report is a bit of a surprise, as we were expecting the construction industry to add between 15,000 and 20,000 jobs for the month of November," Grandy told Yahoo Finance. "The biggest surprises were within the specialty contractor segment for both residential and non-residential construction employment, which has been one of the primary engines for growth in construction but added just 1,900 jobs for the month."
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Single-family vs multifamily
The figures come after builders broke ground on more new housing projects in October, including single-family and multifamily homes, climbing 1.9%.
Single-family permits and starts have been much more robust than multifamily. In fact, single-family starts and permits are up over 13% year-over-year, while multifamily is down in the mid- to high-20% range, according to data gathered by Bespoke Investments Group.
"As the long-term demographics in housing continue to remain positive for the industry with the millennial generation reaching prime buying age and household formations across the US continuing to outpace housing completions, I would expect that housing will continue to add jobs to support the needs of additional housing stock," Grandy said.
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Ken Simonson, chief economist at Associated General Contractors, also expects the overall construction pipeline to soon shift back in favor of single-family units instead of multifamily.
"Once those buildings finish up, we'll see a big drop in multifamily construction and similarly, on the non-residential side, I expect big shifts away from office that's already in decline," Simonson added.
‘Lay off people in the winter’
Year over year, employment in construction has increased by 200,000 jobs, an increase of 2.6%. The unemployment rate on a non-seasonally adjusted basis for the construction industry rose to 4.8% in November, while the unemployment across all industries decreased to 3.7% last month.
According to experts, seasonality does play a role in hiring.
"You lay off people in the winter that drives your unemployment rate higher and then it comes back down," Grandy said.
Meanwhile, residential specialty trade contractors added 2,700 jobs. That compares to an average of 4,700 per month over the past three months, which is slightly below the 5,600 pre-COVID average.
Construction workers still have reasons to cheer. Wage growth notched up, with average hourly construction wages rising 5.9% year over year in November, higher than the average across the US economy.
Construction counted 423,000 job openings at the end of October, according to the Bureau of Labor Statistics released Tuesday, a drop of 4,000 jobs in September. But that’s still up by 25,000 from the same time last year.
The percentage of open construction jobs that went unfilled came in at 5% in October. That’s higher than a year ago and at the start of the pandemic, according to Anirban Basu, chief economist for Associated Builders and Contractors.
"While labor market tightness is easing across all economic segments, worker scarcity remains a pressing issue for the construction industry," Basu said. "The lack of available workers will remain a headwind for the construction industry over the next several quarters."
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.
