Big Month for Construction Job Growth; Overall Labor Market Outpaced Projections

The construction industry added 39,000 jobs in March, contributing to a total of 303,000 new jobs in the United States, per U.S. Bureau of Labor Statistics. Additionally, construction unemployment improved from 6.7% to 6.3%; overall unemployment remained largely the same with a slight drop at 3.8%. Average hourly earnings are up 4.1% since March 2023 but only a small 0.3% for the month.

Construction Breakdown

Among the 39,000 new construction jobs added in March, significant gains occurred in nonresidential specialty trade contractor positions (16,000) and overall construction of buildings (7,800) for the month. Residential building construction (5,500) outpaced nonresidential building construction (2,300), and heavy and civil engineering construction job growth clocked in at 6,000 new positions for March. 

The large number of new construction jobs in March 2024 is more than double the industry’s average gain since 2023, “showing surprising strength in the face of higher interest rates.”

Commentator Catherine Rampell told CNN the growth in construction is partly seasonal but can also be attributed to the industry’s designation as a “catchup sector,” or an industry that is still recovering from COVID downturns four years ago. 

Overall Picture 

FactSet consensus estimates for March 2024 predicted 200,000 new jobs, which would have been down from the 275,000 added in February and 229,000 in January. However, the Bureau’s report this morning changed the conversation, coming in at nearly 100,000 more jobs than anticipated (303,000). March’s number is higher than the average monthly gain of 231,000 over the prior 12 months, and significantly higher than March 2023 (236,000). This is the 39th month of both job gains and higher-than-expected numbers, and the United States is in the midst of the fifth-longest streak of employment gains on record. This pace is higher than both pre-pandemic monthly gains and average monthly gains over the past year (231,000).

In addition to the large gains in construction, health care (72,000), government (71,000) and leisure/hospitality (49,000) also experienced tremendous growth. 

The Bureau also shares revised numbers to account for information that was not available at the time of initial release each month. Usually, those numbers are revised down –– sometimes significantly –– but revisions for the last two months showed a different trend. January was actually revised up by 27,000 jobs, and February’s number was only lowered by 5,000 positions.

Why So Hot

Several factors can contribute to high job growth numbers. It’s difficult to pinpoint specific impacts in a given month or sector, but there are observable trends that economists can point to. 

Construction growth in March was influenced by seasonal demand and weather, but economists and analysts have outlined less obvious reasons for the surge in construction positions. Labor economist Nick Bunker pointed to the large uptick in nonresidential specialty trade contractor jobs as a partial explanation for the growth. He told CNN that increases in factory construction activity due to federal policy have played a part in the sector’s strong numbers, “despite some loud calls not too long ago that construction employment would suffer in the face of high interest rates.”

The hospitality and leisure sector is also often influenced by weather and seasonal ebbs and flows. The March 2024 growth of 49,000 jobs has placed the industry back at its pre-pandemic pace thanks to increased demand for entertainment, dining out, travel and related experiences.

In the health care sector, The Washington Post attributes the health care growth to “surging demand from the aging baby boomer population,” and the same article credits a government sector that is “flush with cash” for the large growth there. 

Rampell also described to CNN a significant influence on the labor market. She called the U.S. economy “an economy that just won’t quit” and indicated the large number of foreign-born people entering the U.S. workforce is having an outsized impact on job growth. She called the number of jobs created or filled by immigrants “astounding,” and said the net job growth since the pandemic can be “entirely accounted for by immigrants.” She explained that, as U.S.-born older adults are retiring, their positions are very often being filled by foreign-born workers. 

Not All That Glitters

While the gains in construction and jobs overall indicates what Rampell said the Federal Reserve might call “too strong” an economy and Acting Labor Secretary Julie Su referred to on CNN as the “strongest economy in the world,” there are some problem spots in the labor market.

Despite consistent overall unemployment numbers below 4% since February 2022, the number of Black workers not in the workforce rose from 5.6% to 6.4% last month. Conversely, jobless rates for Asian and Hispanic workers went down while other groups, including adult women and teenagers, remained the same. 

In March 2024, the percentage of construction jobs held by women remained the same from February 2024 to March 2024 at 14%, a number that has stayed largely unchanged since March 2023. 

Wage growth also hit its slowest annual pace since mid-2021. In March and February, wages grew less than 1%. Larger numbers of people participating in the labor market can impact wage growth, as companies are less motivated to hike up wages to attract workers. As well, the increase in foreign-born and immigrant workers entering the job market as well as the wage gaps faced by women and people of color can negatively impact wage growth. It’s also important to note that mild wage growth can contribute to a drop in inflation, but consistently flat wages can also discourage worker participation.

Perception and Impact

When asked why only one quarter of registered voters in seven key swing states indicated the economy has improved, Labor Secretary Su told CNN’s Sara Sidner that “some of it is just that we’ve come through a lot as a country over the past three years,” citing the lingering impacts of COVID, high unemployment and supply chain issues. Su added that, nonetheless, 15.2 million jobs have been added in that time. 

Rampell said that a “really hot” jobs market and cooling inflation might sound like universally good news but that it doesn’t mean the Federal Reserve is in any hurry to cut interest rates. Still, she added there is “no sign of a recession.”  

According to Su, “an overall strong economy is good for everybody.”