Increased hiring pace in September dropped industry unemployment to 3.4%, as inflation worries persist
The U.S. Bureau of Labor Statistics again reported stronger-than-expected jobs growth, with its Oct. 7 report showing that the U.S. economy added 263,000 jobs during September. With that figure slightly beating analyst expectations, stock markets were down on the fear the numbers may spur future interest rate hikes by the Federal Reserve.
“Today’s employment report was terrific, which in this upside-down, inside-out economic environment means that it was truly terrible,” said Anirban Basu, chief economist for the Associated Builders and Contractors, summing up BLS’ good news/bad news report:
One of the construction’s most immediate concerns is whether interest rates rise “too dramatically,” Basu said, because “the recovery in nonresidential activity would likely buckle.”
The nonresidential buildings sector is driving the greatest share of construction industry job growth. Of 19,000 construction jobs added in September, an estimated 13,100 are in the nonresidential sector.
Specialty trade contractors in nonresidential work added 11,200 jobs in September, with another 6,500 positions added in the residential sector, for a total of 17,700 new hires among subcontractors.
Also, nonresidential building contractors added 2,400 positions in September, while residential building firms shed 100 jobs overall. A loss of 500 jobs among heavy and civil engineering firms lowered the overall nonresidential jobs gain to 13,100.
Construction’s total unemployment rate fell to 3.4% for September, down from the August rate of 3.9%.
Can Contractors Keep Hiring?
In a statement, the Associated General Contractors of America said contractors “boosted wages for hourly workers at the fastest rate in 40 years” during September, with BLS reporting a 0.7% average pay increase for the month. Added AGC: “Even with the pay raises, many contractors are still having a difficult time finding qualified workers to hire.”
Ken Simonson, AGC chief economist, observed that “job openings going into September were at record levels and the industry’s unemployment rate last month was close to an all-time low, suggesting that jobs will remain hard to fill.”
Contractors appear to remain bullish on their future prospects, despite rising interest rates, Basu added, citing ABC’s most-recent member survey results.
“Backlog remains stable, and many contractors expect rising sales, employment and profit margins over the next six months,” he said. “Their primary issue is not insufficient demand for construction services but rather a lack of access to skilled craft professionals.”
