‘Good news is bad news’ in latest labor report

Dive Brief:

• Construction’s job openings were largely flat in November compared to the month before, according to new Bureau of Labor Statistics data.
• The amount of unfilled positions for which contractors are actively recruiting declined by 2,000 to 388,000, according to analysis from Associated Builders and Contractors. 
• That small drop — down less than 1% from October and 6% from a year before — signaled a continued trend in the industry: Construction needs more workers.

Dive Insight:

“Once again, good news is bad news,” ABC Chief Economist Anirban Basu said in the report, calling the bad news obvious.

“Despite raising interest rates during the last 10 months, the Federal Reserve is still grappling with an excessively tight labor market associated with rapid compensation cost increases,” he said.

In order for the Federal Reserve to reel in inflation, it needs a labor market with fewer open jobs, more unemployment and slower compensation growth. As interest rates continue to rise, they will impact financing costs — including wages — and potentially set up sharp declines in private construction activity, Basu said.

Inflation has also soured the excitement of the Infrastructure Investment and Jobs Act, as the law’s massive funding could be undercut by the increased costs of labor and materials. 

Across all industries the number of open jobs remained high, at 10.5 million. The labor market is still “red-hot,” Basu said.