Looking for higher wages? Look no further than the housing market.
In a note to clients on Friday, economists at Bank of America wrote:
Homebuilders have been complaining about the inability to find skilled labour for some time, but the cries have recently got louder. In a recent earnings call Meritage CEO noted that “tight labour has resulted in longer delivery schedules” while Pulte’s CEO blamed labour as the “primary culprit”of the lower conversion of sales to closed deals. This is seen in the NAHB survey as well: 52% of single-family builders are reporting labour shortages, up from 45% a year earlier and recent low of 21% in 2011.
In the October jobs report, aside from the huge headline payrolls gains perhaps the most encouraging numbers was the increase in average hourly wages, which rose 2.5% over the prior year, the largest increase since the financial crisis.
Average earnings in construction jobs have been running at around 2.5% this year, but if the following chart and commentary from Bank of America is any indication, wages in this sector are about to accelerate.
In a big way.
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