Specialty trade contractors lead employment surge
The U.S. construction industry added more jobs in October than during the previous four months combined, according to an analysis of Bureau of Labor Statistics.
Construction employment expanded by 31,000 net new jobs last month after adding 12,000 jobs in September (revised upward from 8,000). Nonresidential construction employment increased by 20,100 jobs in October after adding 11,100 jobs in September (revised upward from 6,800).
Over the past year, nonresidential construction employment has expanded by 113,100 jobs, or 3.9 percent, which is particularly impressive given the ongoing difficulties many contractors experience filling available job openings.
Despite the overall robust nonresidential employment gains, the nonresidential building sector actually lost 1,000 jobs in October, due in large measure to the impact of a slumping energy sector.
However, specialty trade contractors created more than 21,000 jobs in October, leading to 0.7 percent growth for nonresidential construction employment on a monthly basis.
The overall economy added 271,000 net new jobs in October, far above the consensus estimate of around 175,000. The three-month average gain stands at 187,000 net new jobs. The nation's unemployment rate is down to 5 percent, and the so-called real rate of unemployment stands at 9.8 percent, a multi-year low.
Wages are up 2.5 percent on a year-over-year basis — the fastest pace of wage growth since 2009.
All of this suggests the chances for a Federal Reserve rate hike in December have expanded massively.
The residential construction sector added 6,000 jobs in October after adding 6,100 during the prior month, while employment in civil and heavy engineering increased by 4,800 jobs.
Overall construction employment increased by 0.48 percent for the month, which is more than any other industry. Employment growth in the professional/business services sector was second at 0.39 percent.
The construction industry's unemployment rate actually rose by 0.7 percentage points to 6.2 percent in October. This is very good news because it indicates more people are again looking to construction as a source of gainful employment.
Construction employment for the month and the past year breaks down as follows:
- Nonresidential building construction employment fell by 1,000 jobs in October but is up by 14,500 jobs or 2.1 percent on a yearly basis.
- Residential building construction employment expanded by 2,400 jobs in October and is up by 25,100 jobs or 3.7 percent on a year-over-year basis.
- Nonresidential specialty trade contractors added 21,100 jobs for the month and employment in that category is up by 98,600 jobs or 4.5 percent from the same time one year ago.
- Residential specialty trade contractors added 3,600 net new jobs in October and have added 74,000 jobs or 4.4 percent since October 2014.
- The heavy and civil engineering construction segment added 4,800 jobs in October and is up by 20,700 positions or 2.2 percent on a year-over-year basis.
Anirban Basu is chief economist of Associated Builders and Contractors.