The November jobs report revealed a slowdown in construction hiring, reflecting economic uncertainty stemming from high interest rates and anticipated immigration policy changes under the new presidential administration.
The Labor Department reported a modest increase of 10,000 construction jobs in November, following a similarly small gain in October. This contrasts with the average monthly growth of approximately 20,000 jobs witnessed between September 2023 and 2024, according to the Center for Economic and Policy Research.
Anirban Basu, chief economist at Associated Builders and Contractors, observed that while many contractors have filled lower-skilled positions, they continue to face challenges in recruiting highly skilled workers. Residential construction added only 1,400 jobs last month, with specialty trade contractors, such as plumbers and electricians, accounting for the majority of new hires within the sector.
Several factors contribute to this cautious hiring approach. Basu cited supply chain disruptions, policy uncertainties related to tariffs, tax cuts, deregulation, federal spending, and immigration as potential deterrents to aggressive staffing decisions. He noted that these combined uncertainties encourage a “wait-and-see” attitude among contractors.
High borrowing costs have also significantly impacted contractors’ willingness to initiate new projects and expand their workforce. Data from the Bureau of Labor Statistics indicates a nearly 40% year-over-year decline in construction job openings in October. Hiring activity also decreased, with 293,000 workers hired in October, marking a 12.5% drop from September and a 23% decrease from the previous year. This represents the lowest hiring level since 2020.
Despite the recent slowdown, construction employment growth has outperformed the overall economy in the past year. The Associated Builders and Contractors’ Construction Confidence Index, based on a survey of 23,000 companies nationwide, reveals that almost 45% of builders anticipate increasing their workforce in the coming six months, compared to only 13% expecting reductions. Total construction employment reached a record high of over 8.3 million in November.
However, persistent challenges in the housing market, including sluggish housing starts, rising inventories, and elevated mortgage rates exceeding 6%, continue to weigh on the sector. Furthermore, anticipated changes in immigration policy under the incoming Trump administration are creating new uncertainties regarding labor supply.
Dean Baker, senior economist at the Center for Economic and Policy Research, suggests that the effects of recent immigration policy changes, including restrictions implemented by the Biden administration in June, may already be impacting the construction industry. He highlighted President Trump’s stated intention to further restrict immigration and the possibility of mass deportations as potential threats to the industry’s labor supply. These factors are likely to influence the construction sector’s performance in the coming year.
In conclusion, the construction industry faces a complex landscape characterized by economic uncertainty and potential policy shifts. While overall employment remains strong, recent hiring trends indicate a more cautious approach among contractors. The interplay of high interest rates, supply chain issues, and immigration policy will likely continue to shape the industry’s trajectory in the near future.
