Area Economy

Employment increase is smallest in four years

January 27, 2017
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National construction employment declined by 3,000 net jobs on a seasonally adjusted basis in December, according to analysis of U.S. Bureau of Labor Statistics data by the Associated Builders and Contractors.

The industry added 102,000 net new jobs on a year-over-year basis, the smallest increase in more than four years. Of the five subsectors, only residential specialty trade contractors added jobs in December (11,700 net new jobs). Nonresidential construction lost 13,400 net jobs for the month, largely due to losses in heavy and civil engineering, which lost 8,900 jobs. These data are adjusted for seasonal variations, which means that one cannot simply blame the poor job performance on the transition from November to December.

A terrific nonresidential construction spending report earlier in the month led to expectations of a more upbeat assessment of the construction employment situation than provided by this report, however. The spending report indicated nonresidential spending expanded to $712.4 billion on a seasonally adjusted, annualized rate in November, representing the highest level of spending in eight years.

One possible way to reconcile seemingly contradictory data is to point out construction firms are reporting greater difficulty filling available positions. More than 80 percent of ABC members report difficulty finding appropriately skilled labor. Accordingly, many construction firms are required to do more with fewer people, which should eventually show up in construction productivity data that reflect the amount of output generated by the average worker on a per-hour-worked basis.

The significant number of jobs lost in the heavy and civil engineering segment indicates U.S. spending on infrastructure remains low. For much of the year, the level of spending in publicly-financed segments was stuck in reverse, and this most recent data indicate increased investment in the shared built environment is much needed.

There were jobs lost in privately financed segments, as well. Employment in nonresidential building construction dipped by 1,300 jobs in December. While that’s not a massive loss, it is somewhat surprising given data regarding construction spending, including in the office and lodging segments.

The construction unemployment rate expanded by 1.7 percentage points in December and stands at 7.4 percent. This figure, however, is not seasonally adjusted, and construction industry unemployment has increased from November to December during each of the prior 16 years by an average of 2 percentage points. The national unemployment rate ticked higher to 4.7 percent in December. That statistic is seasonally adjusted.

Anirban Basu is chief economist with Associated Builders and Contractors.

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