Construction employment rebounds in a big way
National construction employment rebounded in August, adding 28,000 net new jobs on a seasonally adjusted basis, according to a report from the U.S. Bureau of Labor Statistics. It was the best month for job gains in construction since February, according to a data analysis by Associated Builders and Contractors.
Construction employment declined by 3,000 net positions in July. Nonresidential construction added 14,300 net new jobs in August after losing 6,200 in July, according to government data.
The construction industry unemployment rate, which is available only on a nonseasonally adjusted basis, fell two-tenths of a percentage point and now stands at 4.7 percent. This represents the first time during the past five years the industry’s unemployment rate declined in August. The unemployment rate for all U.S. industries inched up to 4.4 percent.
Data work in strange ways. In July, overall national job growth remained strong, while construction statistics sagged. One month later, the construction jobs picture looks much brighter, while headline numbers for the broader economy appear a bit less benign.
Rather than focusing on oscillations in monthly data, look at the broader picture. Here’s what we know: The U.S. labor market remains strong, as evidenced by enormous numbers of job openings, and construction activity remains robust, especially in certain private segments. This helps explain the 44,800 net new positions added by nonresidential specialty trade contractors during the past year. There is even evidence of growing demand for public construction services, with the heavy and civil engineering segment adding another 6,600 net new positions in August and more than 45,000 during the past year.
The result is demand for construction workers continues to expand despite occasional contradictory information emerging from monthly statistics. Accordingly, construction firms are increasing their scramble rate for employees, driving up hourly compensation in the process. Leading indicators suggest overall construction activity will continue to expand during the months ahead. Among these are the Architecture Billings Index and ABC’s Construction Backlog Indicator.
Hopefully, more Americans will enter the labor market and join apprenticeships or other training programs to participate in the nation’s steadily improving construction economy. Not only will this make it easier for firms to deliver construction services on time and on budget, but it also will expand the nation’s tax base, shrink demand for public assistance, expand the middle class and accelerate economic growth.
Anirban Basu is chief economist for Associated Builders and Contractors.