The Associated Builder and Contractors trade association recently announced that despite a 1.7 percent drop in nonresidential construction spending for the month of July, construction employment added 28,000 net new jobs on a seasonally adjusted basis.
In the previous month, construction employment declined by 3,000 positions, while nonresidential construction added 14,500 new jobs in August, following a loss of 6,200 jobs in July.
“In July, overall national job growth remained strong, while construction statistics sagged,” Anirban Basu, ABC chief economist, said in a news release. “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,” Basu said. “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.”
Construction unemployment, according to ABC, fell two-tenths of a percent to 4.7 percent in August, marking the first time the industry has seen a drop in unemployment rate for the month.
Unemployment rate for all U.S. industries stood at 4.4 percent, ABC said.
“The result is that demand for construction workers continues to expand despite occasional contradictory information emerging from monthly statistics,” Basu said. “Accordingly, construction firms are increasing their scramble rate for employees, driving up hourly compensation in the process. Leading indicators suggest that overall construction activity will continue to expand during the months ahead.”
ABC also reported a drop in nonresidential construction spending by 1.7 percent, totaling $688.4 billion, which marked the lowest point in nonresidential construction since December 2015.
The association said 13 of 16 nonresidential subsectors contracted in July.
“A number of private segments that had been generating significant growth in opportunities for contractors saw activity dwindle in July, including office (-1.3 percent), lodging (-2.7 percent) and amusement and recreation (-1.4 percent),” Basu said. “For economists and other stakeholders, the question now is whether today’s jobs report tells the tale or today’s spending data are a better indicator.
“Based on consideration of other factors, including leading indicators, the narrative suggesting that construction activity continues to rise seems more reasonable. Anecdotally and in survey data, many nonresidential construction firms continue to report healthy backlog and are looking forward to an active 2018.”