July's slowdown in residential construction hiring is a 'one-off,' expert says
The residential construction sector is still running hot, even if the latest numbers suggest a slowdown.
Jobs in the sector declined in July, falling by 5,500 jobs, or 5.5%, from the month before, the Labor Department said on Friday. Overall, jobs in construction gained by 19,000 in July, boosted by the non-residential building construction adding 10,500 jobs and specialty trade contractors gaining 11,200 jobs versus June.
The figures, though, are more likely a blip because the lack of inventory of for-sale homes should continue to boost residential construction, according to experts, as long as builders can hire enough people.
"It's weather-related and I'd want to see confirmation of this in a follow-up report," ING Chief International Economist James Knightley said. "I would need to see at least two to three months of weak construction jobs numbers for me to be concerned. I think a one-off number given the weather patterns we've been seeing, the disruption that it causes, we can take that one."
Other data suggest continued building. Single-family housing projects registered an increase of 2.1% in June, according to separate data from the Commerce Department. There’s a sizable shortage of single-family homes for sale, which in turn has pushed construction activity.
"There has been a rebound in home building throughout the spring, as the existing-home market continues to remain severely undersupplied," Nick Grandy, RSM US real estate senior analyst, wrote in a statement.
"As homebuilders continue to capture market share, the need for labor to complete homes has grown. The June new-homes sales data showed that new homes sold, for which construction has not started, rose to a one-year high of 164,000 seasonally adjusted," Grandy added.
Jobs with residential specialty contractors also remained robust in July, up 13.3% over June, further highlighting how more homeowners are seeking renovation projects for their current home instead of moving as mortgage rates near 7%.
Read more: What the Fed rate hike means for mortgage rates and loans
"As existing homeowners remain rate-locked into their homes with no financial incentive to move, they are likely to increasingly turn to renovating their homes to suit their evolving needs," Ksenia Potapov, First American economist, wrote following the release of the jobs report.
But construction's already-tight worker woes aren’t going anywhere. The construction industry had 374,000 job openings in June, down 5,000 from May’s figures, or a 0.1% drop, according to data from the Bureau of Labor Statistics released Tuesday.
Meanwhile, the number of quits also fell nationwide, with construction seeing the largest decline: 51,000 fewer workers quit in June than in May. And about 4.5% of construction jobs went unfilled in June, signaling the struggles aren’t yet over.
"Some will focus on the fact that construction job openings declined in June," said Anirban Basu, chief economist for Associated Builders and Contractors, in a statement.
"But the real story is that, despite massive interest rate increases and tighter credit conditions facing developers and others that purchase construction services, the number of unfilled jobs remains so elevated by historical standards," Basu wrote.
"With a plurality of contractors indicating that they intend to increase staffing levels over the next six months, according to ABC’s Construction Confidence Index, many will continue to report that their leading challenge is the retention and recruitment of highly trained construction craftspeople," Basu added.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.
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