One of the bits of economic data that gets less mainstream media attention is a survey call the Job Openings and Labor Turnover Survey (JOLTS). The JOLTS measures how many openings there are and why, creating a “quit” rate that measures what percentage of turnover is due to workers quitting their job. The correlation between a higher quit rate and a good economy is very strong. The quite rate is high right now, a condition that is exaggerated by the shrinking workforce demographics. In the construction industry it’s a perfect storm of higher demand for construction and fewer workers.
The AGC’s chief economist, Ken Simonson, commented on the release of the JOLTS data last Friday. Here are Ken’s comments:
Job openings in construction at the end of July totaled 373,000, an increase of 59,000 (19%) from the July 2018 total and the highest July total in the 19-year history of the series. This was the 14th consecutive month of record job openings for a given month. (The data are not seasonally adjusted. Because hiring and openings in construction vary considerably from month to month, comparing openings across months is not meaningful.)
The industry hired 442,000 employees in July, 8,000 (2%) fewer than the number hired in July 2018 but the second-highest July total since July 2008. While the dip in hiring may be an early sign of cooling demand, it may also be an indication that employers could not find enough suitable candidates—which is consistent with the jump in openings at the end of the month. Combined filled and unfilled positions (hires + openings) in July were a record for the month.
There were 167,000 layoffs and discharges in July, and increase of 29,000 (21%) from July 2018 but roughly in the middle of the range of July layoffs over the past seven years. Layoffs have exceeded or matched year-ago levels for nine consecutive months, a possible indication of a slowing market—or of the industry hiring more workers without acceptable skills. The rate of layoffs (layoffs as a % of employees) has remained near the low end of each month’s range over the past seven years, suggesting there is no strong trend toward cooling demand for construction.
The quit rate in July was 2.8 per 100 employees, slightly less than the July 2018 rate (3.1) but still the second-highest rate since 2008. This suggests employees are finding opportunities elsewhere. The data do not show if they quit for other construction jobs, jobs in other industries, or are leaving the workforce. But a high quit rate is indirect evidence of continuing opportunities for employment in construction.
In sum, I think the data are consistent with a continuing strong construction market and with the results of the 2019 Autodesk-AGC of America Workforce Survey, which found that 91% of the 1,935 respondents expect their firms will hire hourly craft personnel in the next 12 months (19% for expansion, 72% for replacement). That result was very similar to the 2018 survey and the January 2019 Sage-AGC Hiring and Business Outlook Survey.