Nonresidential construction employment up across the board

May 17, 2010
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In a sure sign that the construction season is underway, the nonresidential construction industry gained 9,200 jobs in April, according to the May 7 employment report by the U.S. Labor Department. In the past two months, nonresidential construction employment has grown by 21,500 jobs. However, the nonresidential construction industry has lost 51,200 jobs, or 6.9 percent, since April 2009.

Meanwhile, employment in nonresidential specialty trade construction increased by 6,200 jobs in April and has added 21,700 jobs in the past two months. Nonresidential specialty trade construction lost 261,000 jobs since April of last year, or 11.5 percent. Employment for heavy and civil engineering construction also continued to increase as the sector added 9,200 jobs in April. However, the sector has lost 55,400 jobs, or 6.4 percent, compared to the same time last year.

In contrast, the residential construction sector slipped by 4,000 jobs in April after experiencing marginal increases the previous month. Year-over-year, residential construction employment is down by 76,200 jobs, or 11.6 percent. Total construction employment grew by 14,000 jobs in April, though it is still down by 554,000 jobs, or 9 percent, compared to last year. The national unemployment rate for the construction industry in April now stands at 21.8 percent, down from 24.9 percent in March, but still higher than 18.7 percent in April 2009.

Despite an increase of 290,000 jobs in April — the largest monthly increase since March 2006 — the nation’s unemployment rate rose to 9.9 percent, up for the first time since last October. An estimated 15.3 million people are still out of work. In the past two months, total employment has risen by 520,000 jobs, but is down 1,381,000 jobs, or 1 percent, from April 2009.

Today’s jobs report was precisely what the nation needed. The addition of nearly 300,000 jobs in April blew away consensus estimates; however 66,000 of those new hires are temporary government workers to conduct the census. Still, there was good news in the nonresidential construction sector, which experienced increases in job totals for the second consecutive month.

This is not to suggest that the nation's economy, or the nonresidential construction industry, is out of the woods. As signs of labor market recovery emerge, there are indications of growing headwinds in U.S. financial markets and in other parts of the world, namely Europe. With investors globally seemingly becoming more cautious, this could create additional issues for capital formation. Construction is arguably the part of the economy that depends most on functioning capital markets and investor markets.

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

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