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Construction payrolls grow 2.4 times as fast as business services over the past year
Construction added 109,000 jobs in a year, growing 2.4 times as fast as professional and business services in BLS payrolls released October 2. Wolf Richter credits data centers, factories and power plants, so hiring is following capital spending into physical projects.
The Investor · Invest desk
What happened
- Professional and business services, a 22.48 million-job category that includes tech and AI work, lost 9,000 jobs in the month and 20,000 over three months but is still up 123,000 on the year.
- Manufacturing added 9,000 jobs in the month to reach 12.65 million, part of a 40,000 gain over the past 12 months.
- Employment in the industry covering software publishing and motion pictures has fallen to its lowest level since 2015, and Richter blames AI plus the cleanup of pandemic over-hiring.
- BLS assigns each job to an industry by the primary activity at its work location, so a job at an Amazon fulfillment center counts as transportation and warehousing.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint A software developer who leaves a publisher for a consulting firm registers as one industry's loss and another's gain, so the payroll series cannot separate AI displacement from relabeling.
- exposure Construction's gains rest on a narrow set of projects, so a pause in data-center, factory or power-plant budgets would land on the fastest-growing of these three industries.
- contradiction Business services also holds federal contractors that lost government work in 2025, so its recent losses mix a policy shock with whatever AI is doing to headcount.
The BLS figures released October 2 [4] look different once each industry's year is split into the latest quarter and the nine months before it. Manufacturing gained 44,000 jobs over three months against 40,000 over twelve [2], so the nine months before the latest quarter netted a loss of about 4,000 [2]. Professional and business services went the other way, adding about 143,000 in those nine months before turning negative [3]. Construction added about 64,000 in the first nine months, roughly 7,100 a month, and has run at 15,000 a month since [4].
Across the three industries, the latest quarter netted 69,000 jobs [5]. Construction and manufacturing added 89,000 between them [6], and losses in business services account for the gap. Richter writes that the construction he credits is going up amid reports of shortages of skilled labor such as electricians [5]. The office sector, by his account, has been in a depression since 2020, and housing has been hit by falling demand and a pileup of supply [6].
Manufacturers, Richter wrote, "invest massively to replace human labor," and the jobs that remain require higher skills, often degrees, and include tech jobs [15]. "Recently, production has been in expansion mode, driven by automation, not employment of humans. But this year, even employment has been increasing," he wrote [14].
The case that AI moves jobs between industries depends on the work-location rule. A programmer at a plant counts as manufacturing, and the same programmer at a software publisher does not [7][15]. Of the job losses at publishers and studios, Richter wrote: "But note, this doesn't mean that all these people are unemployed." [9] Many, he says, moved to work locations with a different industry code, including scientific and professional services [10]. His article does not put a number on that flow.
One reading is transfer: AI removes work at publishers and studios, and the people reappear in services. Another is a hangover. Richter describes the 2021-2022 hiring burst in business services as over-hiring that companies then cleaned up, with the low point in October 2025 [11]. A third is that AI cuts and hires at the same time, and Richter allows for it: "The increasing use of AI may have been responsible for some job losses, but there has also been some AI-related hiring." [13]
I think the payroll data supports the narrower half of the transfer thesis. Labor demand is moving toward physical buildout. Construction's year of gains equals about 1.3% of its workforce, against about 0.55% in business services [1]. The data does not show AI moving particular workers between industries. The thesis fails if losses at publishers and studios do not reappear as gains in professional and scientific services [10].
What to watch
- Whether professional and business services slides back toward its October 2025 low after its three-month decline.
- Whether manufacturing's hiring outlasts one quarter, given that the nine months before it netted roughly 4,000 lost jobs.
- Whether reported electrician shortages start to cap construction hiring at data-center and power-plant sites.