U.S. Average Weekly Hours Match Forecasts, Signal Sector Rotation Opportunities

The U.S. labor market in August 2025 painted a picture of stability, with average weekly hours across most sectors aligning closely with forecasts. While the total private sector held steady at 34.2 hours, subtle shifts in industry-specific trends and historical backtesting of macroeconomic cycles reveal compelling opportunities for sector rotation. Investors who align their portfolios with these dynamics can capitalize on divergent growth trajectories, particularly in construction and engineering versus food products manufacturing.

Labor Market Trends: Stability with Subtle Shifts

The Bureau of Labor Statistics (BLS) reported minimal changes in average weekly hours for the total private sector, goods-producing industries, and service-providing sectors. However, sector-specific nuances emerged:
- Construction maintained an average of 39.0 hours, reflecting consistent demand for infrastructure and housing.
- Health care and social assistance added 31,000 jobs in August, though below its 12-month average, signaling a slowdown in growth.
- Federal government employment declined by 15,000, continuing a 97,000-job drop since January 2025.

Notably, manufacturing saw a 0.2% decline in average weekly hours, while food products manufacturing added only 3,100 jobs—a modest gain compared to construction's 11,000. These trends highlight a labor market where cyclical sectors like construction are outpacing stable but low-growth industries.

Historical Backtesting: Construction's Cyclical Edge

From 1939 to 2015, construction employment grew at an annualized rate of 2.3%, outperforming the broader economy. This resilience stems from its responsiveness to infrastructure spending, housing demand, and policy tailwinds. For example, post-World War II expansions and New Deal-era projects historically drove construction employment to record highs. In 2025, construction wages reached $39.33/hour—a 24% premium over the private-sector average—while productivity gains in residential and industrial construction outpaced most sectors from 2019 to 2023.

Conversely, the food products sector has seen a structural decline in employment share, dropping from 30.3% in 1939 to 8.6% in 2015. Despite recent job additions, its reliance on steady consumer demand makes it less responsive to cyclical booms. Margin pressures from supply chain volatility and input costs further limit its growth potential.

Strategic Implications for Investors

The data underscores a clear case for overweighting construction and engineering while underweighting food products manufacturing. Here's how to act:

1. Overweight Construction-Linked Assets:
2. ETFs: Consider the iShares U.S. Home Construction ETF (XHB), which tracks companies involved in residential and commercial building.
3. Individual Stocks: Lennar (LEN) and D.R. Horton (DHI), two of the largest homebuilders, benefit from sustained housing demand and policy-driven infrastructure spending.

5. Underweight Food Manufacturing Exposure:

6. Avoid overexposure to the Consumer Staples Select Sector SPDR Fund (XLP) or individual food manufacturers, which face margin compression and low-growth dynamics.

7. Monitor Labor Metrics for Rotation Cues:

8. Track the CES2000000002 series for construction employment and the AWHAECON indicator for broader economic trends. A rebound in construction hours could signal a shift back to cyclical sectors.

Conclusion: Aligning with Macroeconomic Momentum

The U.S. labor market's stability in August 2025 masks deeper sectoral divergences. By leveraging historical backtesting and real-time labor data, investors can position portfolios to benefit from construction's cyclical strength while avoiding the stagnation of food products manufacturing. As policy tailwinds and infrastructure demand drive construction growth, dynamic sector rotation remains a powerful tool for navigating macroeconomic cycles.

For those seeking to capitalize on these insights, the time to act is now—before broader market trends shift.