The construction unemployment rate rose to 6.9% in January. Unemployment across all industries declined from 3.5% in December to 3.4% last month.

“It is virtually impossible to reconcile today’s employment numbers with other phenomena in the U.S. economy,” said Anirban Basu, chief economist, ABC. “America’s labor market remains red hot despite falling retail sales, declining industrial production, bloated inventories, and high-profile layoff announcements.

“Today’s jobs report strongly suggests that the Federal Reserve has more work to do,” continued Basu. “While many will cheer the jobs report, the bond market did not, with interest rates rising immediately in response to the persistent and surprising strength of the nation’s employment market. While contractors may be thrilled to hear the labor market remains strong, associated upticks in borrowing costs increase the likelihood of a recession sometime later this year.

“Many contractors may shrug off such concerns given current elevated backlog,” said Basu. “ABC surveys reveal that contractors plan to continue to hire and expand operations. Indeed, the nation’s nonresidential construction industry added more than 19,000 jobs in January. But the outlook may dim later this year as the cost of project financing continues to rise, setting the stage for what could be a meaningfully weaker 2024, at least in construction segments that are primarily privately financed.”