Construction Industry Shows Resiliency in December Employment

The U.S. Bureau of Labor Statistics (BLS) has reported that the American economy added 216,000 jobs in December 2023, as the nationwide unemployment rate held steady at 3.7%, continuing the longest stretch of unemployment below 4% in more than 50 years.

“In the past year, jobs grew by an average of 225,000 a month, totaling 2.7 million jobs created in 2023,” said U.S. Acting Secretary of Labor Julie Su. “We also experienced this sustainable growth across many industries. For example, in construction, an average of 16,000 jobs were created each month last year, and manufacturing job growth remained steady throughout 2023. In addition, last year, we marked historic milestones. Labor force participation among prime-age women hit an unprecedented high, and the annual rate of unemployment for Black workers was 5.5%, the lowest annual unemployment rate for Black workers since we started tracking this data.”

According to the BLS, total nonfarm payroll employment increased by 216,000 in December, and the unemployment rate was unchanged at 3.7% month-over-month, as employment continued to trend upward in the government, healthcare, social assistance, and construction sectors, while transportation and warehousing reported a loss in jobs.

“The revised numbers suggest still strong, but cooling labor market conditions, a trend expected to persist in 2024,” said First American Economist Ksenia Potapov. “According to the Federal Reserve’s latest projections, the unemployment rate is expected to increase to 4.1% by the end of 2024.”

With the unemployment rate holding at 3.7% in December, the number of unemployed persons was essentially unchanged at 6.3 million. These measures are higher than a year earlier, when the jobless rate was 3.5%, and the number of unemployed persons was 5.7 million.

“Job openings, the pace of hiring, and the quits rate are all trending down, but layoffs and initial claims for unemployment insurance are not moving higher. Together, these data indicate a market where employers are slower to take on new employees, but are not seeing enough weakness to dramatically cut payrolls,” added Mortgage Bankers Association (MBA) SVP and Chief Economist Mike Fratantoni. “Wage growth at 4.1% over the past year remains brisk, but we expect this will slow in the year ahead, supporting further reductions in inflation.”

Among the major worker groups, the unemployment rates for adult men (3.5%), adult women (3.3%), teenagers (11.9%), Whites (3.5%), Blacks (5.2%), Asians (3.1%), and Hispanics (5%) showed a slight change in December.

In December, construction employment continued to trend up by adding 17,000 jobs. Employment in non-residential building construction increased by 8,000. Construction added an average of 16,000 jobs per month in 2023, little different than the 2022 average monthly gain of 22,000.

“The construction industry continues to show remarkable resiliency, even in a difficult housing market. While dipping during the early months of the pandemic, residential building employment recovered quickly and even surpassed pre-pandemic levels,” said Potapov. “Residential building construction employment was up 0.2% year-over-year, while non-residential was up by 4.9% annually. Compared with pre-pandemic levels, residential building employment is up 11.8%, while non-residential building is up 4.9%. The fastest monthly growth came from non-residential building construction, which increased by 8,100 jobs, but nearly all sub-sectors, except for heavy and civil engineering construction, experienced growth.”

Fratantoni added, “In summary, this report shows a job market little changed from November. We expect that the economy will slow down in 2024, and this will likely lead to increases in the unemployment rate. In terms of implications for the housing market, these data are likely to keep interest rates from falling further at this point, but we expect mortgage rates to drift down over the year as the economy slows.”