by Arsene Aka, Senior Economist at Dodge Construction Network
The Bureau of Labor Statistics (BLS) reported in its latest employment report that job creation at 254,000 in September far surpassed economists’ predictions for 150,000 new jobs. The gains were primarily driven by strong hiring in food services and drinking places (69,000), health care (45,000), social assistance (27,000), and construction (25,000). In addition, July and August were revised up by a combined 72,000 jobs. Meanwhile, the unemployment rate fell to a three-month low of 4.1% on the back of a noticeable decline in the jobless rate for men ages 20 years and over. U.S. wage growth—captured by the average hourly earnings for all U.S. employees on private nonfarm payrolls—stood at 4.0% year-over-year (y/y) last month, up from 3.9% y/y in August.
As said above, construction employment rose a robust 25,000 in September, higher than the average monthly gain of 19,000 recorded over the prior twelve months. Over the month, nonresidential specialty trade contractors posted the most gains, adding 17,000 jobs, followed by residential specialty trade contractors (5,800), and heavy and civil engineering construction sub-sector (3,800). Like the nation, wage growth in the construction industry accelerated from 4.4% y/y in August to 4.6% y/y last month. The industry’s jobless rate rose from the record-low 3.2% in August to 3.7% in September.
Following the moderation late last month in the Federal Reserve’s favorite inflation metric—the core personal consumption expenditure deflator—some economists expected another 50-basis point interest rate cut by the Fed in November. Dodge Construction Network believes the latest employment report aligns with a more gradual pace of interest rate reductions by the monetary authority. Dodge expects a 25-basis point rate cut each at the Fed’s November and December meetings, which will help boost construction employment and starts over the short term.
