The Jobs Report Looks Fine. Should We Feel Fine?

The May jobs report landed this week with a headline that sounds good with 172,000 jobs added. This marks the third consecutive month of positive payroll growth with upward revisions to March and April totaling 93,000 jobs. The unemployment rate held at 4.3 percent. By any standard read, that is a solid report. When you read the Employment Situation along with the JOLTS report, they tell a more complicated story and we need to look past the headline before drawing any conclusions.

What did the report show for construction specifically?

Construction employment was essentially flat in May. BLS characterized it as "little change over the month," the same language used for manufacturing, retail, and several other sectors. The sector has added 65,000 jobs since January, which sounds healthy, but the monthly pace has cooled considerably. January alone accounted for 45,000 of those gains. The spring hiring that typically accelerates the sector's seasonal recovery has been muted.

Annual average hourly earnings (AHE) growth across broad private nonfarm payrolls cooled notably, dropping from 3.6% last month down to 3.4% in May. Yet, construction wage growth remained stubbornly insulated and highly elevated at 5.0%. For construction workers, wage pressure is running significantly ahead of the macro cooling trend. These labor increases are incredibly sticky due to multi-year collective bargaining agreements. If core inflation remains elevated, expect little to no relief in the upcoming round of local labor settlements, regardless of what the national average implies.

How does JOLTS fit in?

The April JOLTS report provides the context the Employment Situation headline obscures. Job openings economy-wide surged to 7.6 million in April, the largest single-month increase since April 2021, and well above the 6.88 million the market expected. At the same time, hires fell to 5.1 million and total separations fell to 5.0 million.

 Read that combination again. Demand for workers went up sharply. Actual hiring went down. That is not a sign of a cooling labor market. That is a sign of a market where employers cannot fill the seats they need to fill. Construction did not participate in that surge. April construction openings came in at 259,000, essentially flat month over month, while the economy-wide number jumped 731,000. That dynamic describes the broader economy. The data show that professional and business services alone swallowed up 668,000 of those new openings. Construction tells a different version of the same story.

As the chart demonstrates, a distinct structural trend has solidified over the last two years. Construction job openings have been running consistently below hires and separations since mid-2024. Because hires and separations are tracking each other in lockstep, the existing workforce is cycling through at a steady rate, swapping workers from company to company, but the overall labor pool is failing to grow.

When job openings run below this natural churn rate for an extended period, it indicates that firms are letting open positions lapse rather than fighting to expand headcount. Over time, this dynamic quietly drains capacity from the industry. Trained tradespeople leave through natural turnover or exit for sectors with expanding openings, and they aren't being replaced by fresh talent. This is a structural availability problem, not a cyclical one.

So what is the risk for someone planning a construction project right now?

The risk is a mismatch between what the headline says and what the field is telling you.

A 172,000-job headline reads as a healthy economy. But the JOLTS structure, where economy-wide openings surged while construction sat flat, describes a labor market recovery that is bypassing the trades. In construction, that translates directly into competition for the same pool of trade contractors, pressure on subcontractor schedules, and wage inflation that does not appear in your escalation assumptions unless you are tracking it at the trade level.

The sectors leading May job growth were leisure and hospitality, local government, and health care. Construction was not among them. That is not alarming on its own, but it reinforces that the workforce additions driving the headline are not flowing into the trades that build projects.

What should we take from this heading into summer?

Three things.

First, do not use the macro jobs number as a proxy for subcontractor availability. The headline is an economy-wide average. Construction competes in a much narrower labor market defined by geography, trade, and schedule.

Second, the construction openings-to-hires gap is not just a wage pressure indicator, it is a workforce attrition signal. When posted demand runs below the sector's natural turnover rate for months at a time, trained workers leave for other industries and are not replaced. The contingency assumptions in your project budget almost certainly do not account for a structurally smaller trade workforce in 2027 than exists today.

Third, the upward revisions to March and April are a reminder that initial BLS releases are not final. The labor market is stronger than it looked a month ago, which means the competitive environment for construction labor is also tighter than a month ago.

The jobs report looks fine. The construction labor market looks tighter than the jobs report.