Construction job loss seen

October 12, 2009
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Despite reports that the nation’s recession has ended, employment in the nonresidential construction industry fell by 13,000 jobs in September, according to the Oct. 2 employment report by the U.S. Labor Department. Since September 2008, the nonresidential construction sector has lost 107,800 jobs, or 13.0 percent, and now stands at 710,700.

The pace of job loss in heavy and civil engineering construction employment has been similar to the pace of job loss in nonresidential construction. Heavy and civil engineering construction shed 11,900 jobs for the month and 123,800, or 12.9 percent, from the same time last year. Nonresidential specialty trade contractor employment fell by 25,900 jobs in September and is down 418,200, or 16.4 percent, on a year-over-year basis.

The residential construction sector lost 7,400 jobs in September and has lost 128,700 jobs, or 16.0 percent, from a year ago. Overall, construction employment fell by 64,000 last month and is approaching 1.1 million jobs, or 15.3 percent, lost since September 2008.

Overall, total national employment shrank by 263,000 jobs in September and is down 5,785,000 jobs, or 4.2 percent, compared to September 2008. The nation’s jobless rate is now 9.8 percent — the highest level since June 1983.

This is not good news. The pace of job loss in September was greater than the 12-month average, which indicates that the nonresidential construction sector continues to take a beating.

After several months of improvement in terms of reductions in the pace of job losses, September’s performance indicates that the labor market is no longer steadily improving. That is problematic for a number of reasons. Because consumer confidence, in part, is so clearly impacted by employment and unemployment statistics, the reality now is that the U.S. economy has moved one step closer to the inevitable — double-digit unemployment.

Many economists had predicted that the pace of job loss in September would be less than 200,000. But for those of us who are engaged in consulting and speak on a daily basis to employers, this appeared excessively optimistic. Many nonresidential and residential contractors have been hanging on financially, but are now giving up because the pace of economic recovery simply has not been sufficiently brisk.

The implication of this report is that construction employment is not poised to recover anytime soon. Though construction clearly benefits from the addition of infrastructure monies as part of February’s stimulus package, this financial assistance does not appear to be enough to offset the persistent tight credit market and the lack of demand for new retail, lodging, office and other space.

Anirban Basu is chief economist with Associated Builders and Contractors, a national association representing 25,000 merit shop construction and construction-related firms within the U.S.

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