The long-awaited September employment data, postponed because of the government shutdown, was finally released this past Tuesday. Though the overall jobs created for the month fell short of market expectations, the unemployment rate ticked downward a bit, to 7.2% from the prior 7.3%.
There was a surprising bright spot in the data: The construction industry added 20,000 jobs in September, a big improvement from the stagnant job growth of the previous six months.
While this is definitely good news for the economy, only about 25% of the added jobs were in the residential construction sector -- not great news for the housing industry.
Housing: Where are the jobs?
The Wall Street Journal notes that only 5,400 of the 20,000 construction jobs were in residential construction, which is actually less than the monthly averages over the past six months. Interestingly, single-family construction rose by 1.6% in August from July, and residential construction, which includes multi-families, is up nearly 19% from one year ago. Why, then, aren't there more jobs being filled?
One reason given is that homebuilders are reluctant to hire more workers until they're sure that the housing recovery has legs. At the moment, builders don't have enough confidence in the market to do anything more than work their current crews harder to keep up. According to the National Association of Home Builders, builder confidence in the new, single-family market sagged in October.
Another problem concerns a shortage of skilled labor to fill available jobs. The inability of builders to find workers has increased the time necessary to complete a home, in addition to raising costs to cover higher wages and subcontractor rates. In congressional testimony this past June, the NAHB noted that a survey of its members revealed a chronic worker shortage since the previous June, and that nearly 46% had projects delayed as a result.
Cause for hope
Still, the news isn't all bad. Much of the drop in builder confidence was due to the fiscal stalemate in Washington in the first part of October, and sales of new homes rebounded nicely in August, after falling in July.
Even the Bureau of Labor Statistics numbers show improvement in the number of residential building jobs from August to September, particularly in the residential specialty trade contractors. More importantly, the number of jobs in both categories have been rising steadily -- albeit slowly -- over the past year.
In its October outlook, Freddie Mac notes that construction employment levels are 1 million to 2 million jobs shy of what's needed for economic growth, and that it will probably take more than two years to reach a full recovery. Until then, all gains in housing jobs, no matter how slight, will move the economy ever closer to achieving its full potential.
