by Arsene Aka, Senior Economist at Dodge Construction Network
The latest jobs report published by the Bureau of Labor Statistics (BLS) was mixed, as it showed a decline in the jobless rate in August together with significant downward revisions in nonfarm payroll jobs over the prior two months. Total nonfarm employment increased by 142,000 last month, which was lower than the average monthly gain of 202,000 recorded over the prior 12 months and lower than the 165,000 new jobs expected by economists. In addition, employment in June and July was revised down by a combined 86,000. As a result, job gains in June and July stood at 118,000 and 89,000 respectively. Meanwhile, the unemployment rate fell to 4.2%, from 4.3% in July, mostly due to a decline in the number of people on temporary layoff. U.S. wage growth—captured by the average hourly earnings for all U.S. employees on private nonfarm payrolls—accelerated to 3.8% year-over-year (y/y) last month, from 3.6% y/y in July.
In the construction industry, employment rose by 34,000 in August, doubling the average monthly gain of 17,000 over the prior 6 months. Gains in employment were broad based, with heavy and civil engineering construction (13,500) and nonresidential specialty trade contractors (14,000) posting the largest increases in employment. Wage growth in the construction industry accelerated to 4.4% y/y in August from 4.3% y/y in July and remained above the nation because of persistent labor shortages. The industry’s jobless rate fell robustly from 3.9% in July to 3.2% last month, a record low.
The latest employment report confirms Dodge Construction Network’s outlook that a rate cut by the Federal Reserve will take place this month. Dodge continues to expect a 25-basis point rate cut since last month’s payroll growth bounced back from July. Dodge also expects the Fed will deliver another rate cut in December and then in every quarter until the target rate reaches 3% in late 2026. Lower interest rates will benefit interest-sensitive construction sectors, boosting employment. Construction employment grew 2.9% y/y in the first eight months of the year, down from 3.4% y/y over the same period in the previous year. Dodge expects moderate-to-robust construction employment growth rates over the next two years.
