Monthly unemployment plunges even as homebuilding growth slows
The U.S. construction industry added just 1,000 net new jobs in April, according to figures released by the U.S. Bureau of Labor Statistics.
Although industrywide job growth was marginal, the nonresidential construction sector added 6,600 net new jobs in April. Revisions to the previous two months of construction data show a net decrease of 3,000 jobs, with March’s construction employment estimate raised by 4,000 jobs but February’s downgraded by 7,000.
Lots of data including the BLS report indicate that residential construction has been slowing. This may be partly due to concerns that the multifamily rental market in some parts of the country is being overbuilt.
Since these are April numbers, winter weather’s not to blame.
There is a conventional notion that residential construction leads commercial construction. Nonresidential contractors have benefitted from the surge in multifamily residential construction in recent years because developers frequently incorporate retail or other commercial components into their projects.
The slowing in residential construction may partly explain the recent softness in nonresidential construction spending.
For now, increased spending on hotels, office buildings, data centers and warehouses related to e-commerce is helping support nonresidential job creation.
The bigger issue for contractors is not excess labor but difficulty finding appropriately skilled labor. Construction industry unemployment is down to 6 percent from 8.7 percent in March — the largest month-over-month rate decrease since April 2005.
Firms are responding by offering current workers more hours. The average workweek expanded by four-tenths of an hour in April to 39.1 hours per week, and average weekly earnings rose by nearly $14.
According to BLS estimates, residential specialty trade contractors took the brunt of the hit in April, losing 10,900 positions. The heavy and civil engineering sector lost 2,200 positions. Here’s a look at employment changes by sector:
- Residential building construction: Down by 7,100 jobs in April, up by 37,500 jobs (5.4 percent) year over year.
- Nonresidential specialty trade contractors: Down by 5,500 jobs in April, up by 76,700 jobs (3.3 percent) year over year.
- Residential specialty trade contractors: Down by 10,900 jobs in April, up by 103,300 jobs (5.9 percent) year over year.
- Heavy and civil engineering construction: Down by 2,200 jobs in April, up by 17,900 jobs (1.9 percent) year over year.
Anirban Basu is chief economist for Associated Builders and Contractors.