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The construction boom contributed to employment increases in March

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Updated April 5, 2024 at 1:08 p.m. ET

Construction companies helped put together another strong month for the U.S. labor market.

The Labor Department reported Friday that construction companies added 39,000 jobs in March, a notably strong result given high interest rates. There was also strong hiring in health care, restaurants and local government. The unemployment rate fell to 3.8%, even as more than 400,000 people entered or re-entered the labor market.

“Today's release was a blockbuster jobs report and suggests the recession is not coming anytime soon,” said Anirban Basu, chief economist at Associated Builders and Contractors (ABC). He noted that construction job gains in March were about double last year's monthly average.

The ABC's latest Construction Confidence Index found that almost 48% of construction companies expect to create new jobs in the next six months, while only around 11% expect job cuts.

This is surprising at a time when borrowing costs are so high. According to Freddie Mac, mortgage rates are around 6.8%. Of the jobs added in March, around 14,000 were in residential construction, 19,000 in non-residential construction and 6,000 in civil engineering projects.

“We are seeing an increase in project opportunities for our people,” said Ryan Odendahl, CEO of Kwest Group, a civil and industrial construction company based in Perrysburg, Ohio. “We do everything from a large road construction project to bike path and park-like projects.”

Kwest has about 340 employees and is looking to hire more. About 20% of the company's employees are military veterans, which Odendahl calls a good training ground.

“A squad leader is a foreman with different skills,” Odendahl said. “The ability to work outside. The ability to change quickly and deal with adversity, which happens every day on projects.”

The unemployment rate for construction workers was 5.4% in March – higher than the national average but lower than 5.6% a year ago.

“Young people are starting to recognize the opportunities that the construction industry offers, both in terms of earning potential and growth potential,” Odendahl said. “We as an industry need to do a better job of telling the story of some of the great things going on in construction. We compete with every other sector in the economy for people.”

Overall, US employers added 303,000 jobs in March – significantly more than forecasters expected. The strength of the labor market has allowed the Federal Reserve to take its time lowering interest rates.

“We don’t need to be in a hurry to cut interest rates,” Fed Chairman Jerome Powell said recently at the Federal Reserve Bank of San Francisco. “We can wait and become more confident that inflation will actually come down to 2%.”

The Fed will closely monitor the release of March inflation numbers next week. Average wages rose 4.1% in March, almost certainly outpacing price increases.

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