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The week of October 22, 2024

Weekly Economic & Business Outlook

Latest Economic Outlook
  • Construction backlog ticked up in September by 0.4 months.
  • The gap between construction spending and staffing services within the sector remains wide.
  • A long-term rebound in construction staffing services will depend on the pace of interest rate cuts.
Latest Staffing Research
  • The Glassdoor Employee Confidence Index has stagnated since Q2.
  • Workers with lower confidence in their employer are more likely to look for a new job
  • Many employees will be eager to change jobs if the labor market heats up

Weekly Economic Outlook

10/22/2024

While the construction sector is one of the first sectors to support a rebound within temporary help services given its sensitivity to interest rates, relief will not be immediate. It will likely come long-term as reductions to the federal funds rate translate into lower labor costs for employers.

Noah Yosif

Construction Spending Is Up, Will Staffing Services Follow?

The Associated Builders and Contractors released its monthly Construction Backlog Indicator that revealed work in builders’ pipelines rebounding to 8.6 months of runway after decreasing to 8.2 in August, bolstering confidence in the sector. Generally, when there is increased demand for product, demand for additional labor soon follows. This begs the question: Could temporary help services employment within the construction sector be on the cusp of a rebound as well?

The construction sector is particularly sensitive to interest rates, which means that it will likely be one of several sectors to lead the labor market in an eventual recovery once interest rates decline further. “Further” is the operative word because employers in construction, as well as the economy at large, need additional confirmation of a sustained deceleration in borrowing costs before making long-term decisions on headcount. Both job openings and hiring within the construction sector, like many other segments of the economy, continue to decline. This suggests that labor costs remain much too high for a long-term reversal. This is especially true for temporary staffing employment within the Construction sector.

Since the Federal Reserve embarked upon its tightening cycle in early 2022, the gap between construction spending and estimated temporary staffing employment within the sector has progressively increased. This trend is congruent when examining temporary staffing employment within construction-specific occupations, general construction occupations, and construction-adjacent occupations. Hence, while the construction sector is one of the first sectors to support a rebound within temporary help services given its sensitivity to interest rates, relief will not be immediate, and likely to come long term as reductions to the federal funds rate translate into lower labor costs for employers.


Construction Spending vs. Temporary Staffing Employment in the Construction Sector

Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics, ASA Research Department

Weekly Staffing Research Outlook

10/22/2024

With employers still hesitant to hire, labor turnover has remained low. However, measures of employee sentiment suggest that many in the workforce are poised for mobility should opportunity arise in a more favorable job market, and employers should be mindful of retention challenges in the year to come.

Tim Hulley

Employee Sentiment Suggests Greater Job Mobility

The Glassdoor Employee Confidence Index—a measure of the share of workers rating the six-month outlook at their company as positive in data collected from the Glassdoor platform—inched up only slightly from 47.6% in August to 47.7% in September 2024. Begun in 2016, the measure peaked in March 2022 before reaching a series low in February 2024, and despite some recovery in Q2 employee confidence has been muted ever since.

Glassdoor data show that employees with low confidence in their employer’s outlook are more twice as likely to seek a new job than employees with a positive confidence rating, and in a strong job market they would likely be able to get one. With today’s weaker job market, the diminished worker confidence reported by Glassdoor could be evidence that more employees are stuck in jobs where they lack confidence in the organization—this in turn portends increased turnover once the job market heats back up.

In similar results, the latest Eagle Hill Consulting Employee Retention Index reading showed that while worker attrition has declined in 2024, a plateau in the measure of employees’ propensity to stay in their jobs could be an early sign of resumed attrition in early 2025. 

With employers still hesitant to hire, labor turnover has remained low. However, measures of employee sentiment suggest that many in the workforce are poised for mobility should opportunity arise in a more favorable job market, and employers should be mindful of retention challenges in the year to come.


Job Applications Started

Six-Month Outlook—Employee Confidence
Source: Glassdoor Employee Confidence Index

Economic Calendar

Real Time Economic Calendar provided by Investing.com.
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Meet the Research Team
  • Noah Yosif
  • Tim Hulley
  • Max Aldrich
    Max Aldrich
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