Nonresidential gains jobs

April 12, 2010
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The nonresidential construction sector in March saw its first monthly increase in employment since 2008, gaining 9,400 jobs on a seasonally adjusted basis, according to the April 2 employment report by the U.S. Labor Department. Year-over-year, the nonresidential construction sector has lost 75,600 jobs, or 10.1 percent of the total work force. Industry employment stood at 675,100 in March.

Nonresidential specialty trade construction gained 9,400 jobs in March, but year over year has lost 302,400 jobs, or 13.2 percent of employment. Heavy and civil engineering construction employment increased by 6,000 jobs in March but is still down 89,700 jobs, or 10.1 percent, from March 2009.

The residential building construction sector lost 800 jobs in March and lost 86,600 jobs, or 12.9 percent of employment, over the past 12 months.

Overall, the construction industry gained 15,000 jobs in March, the first increase since June 2007, but is down 701,000 jobs or, 11.1 percent, year over year. The non-seasonally adjusted unemployment rate for the construction industry was 24.9 percent in March, down from the 27.1 percent unemployment rate in February, but still higher than the 21.1 percent unemployment rate at the same time last year.

Total employment across all industries increased by 162,000 jobs in March, the first six-digit increase since November 2007. Year over year, employment is down by 2,320,000 jobs or 1.8 percent. The unemployment rate stood unchanged at 9.7 percent for a third consecutive month.

For the most part, today's jobs report should be considered good news. Although the 162,000 jobs created in March failed to meet the expected estimate of 200,000 jobs, much of the difference was due to less employment generation by the U.S. Census Department than economists were anticipating. Stripping out the impact of the Census, the jobs report was largely in line with expectations.

However, there are reasons to be skeptical in how this employment report relates to construction. After many months of consistent employment declines, a number of key nonresidential construction segments experienced job increases, but this is, in part, due to a return of construction activity in March after February's disruptive storms. The storms likely suppressed February employment totals, which could have ended up making March look better than it was. It remains to be seen whether April will represent a month of construction employment growth on a seasonally adjusted basis. Perhaps the most realistic expectation is that April will produce a roughly flat employment performance.

Anirban Basu is chief economist for the Associated Builders and Contractors.

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