Because of tightened monetary policy, the count of total job openings for the economy continues to move slower. This is consistent with a cooling economy that is a positive sign for future inflation readings.

In November, the number of open jobs for the economy declined to 8.8 million. This is notably lower than the 10.8 million reported a year ago. NAHB estimates indicate that this number must fall back below 8 million for the Federal Reserve to feel more comfortable about labor market conditions and their potential impacts on inflation.

While the Fed intends for higher interest rates to have an impact on the demand-side of the economy, the ultimate solution for the labor shortage will not be found by slowing worker demand, but by recruiting, training and retaining skilled workers. This is where the risk of a monetary policy mistake can arise. Good news for the labor market does not automatically imply bad news for inflation.

The construction labor market moved in the opposite direction of the overall economy, with the number of open construction jobs rising. The count of open construction jobs increased to 459,000 in November. The rise indicates an ongoing skilled labor shortage for the construction sector. See state-by-state analysis of employment for November 2023.

Attracting skilled labor will remain a key objective for construction firms in the coming years. While a slowing housing market will take some pressure off tight labor markets, the long-term labor challenge will persist beyond the ongoing macro slowdown.

Chief Economist Robert Dietz provides more details in this Eye on Housing post.