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Joblessness Drops; Jitters Don’t

Friday, July 12, 2013

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Replacing old employment worries with new ones, the construction labor market in the U.S. may be swinging from glut to shortage in just a few short years, experts are saying.

The U.S. construction unemployment rate finally broke into single digits in June—a strong enough drop that experts immediately began expressing concern about impending worker shortages.

The June jobless rate dipped to 9.8 percent—the best June figure in five years and a drop of three percentage points in the last year, according to a new analysis of government data by the Associated General Contractors of America.

construction workers
Associated General Contractors of America

Residential building and specialty trade contractors added 5,200 employees in June; nonresidential building firms added 8,400 workers. Overall, the industry has added 190,000 jobs since June 2012.

Employers added 13,000 construction jobs between May and June, bringing the total to 5,812,000 and fattening the worker ranks across all construction sectors.

Since June 2012, the industry has added 190,000 construction jobs, and unemployment declined to 9.8 percent from 12.8 percent. The number of the unemployed construction workers dropped by 214,000, to reach 825,000.

The association also recently reported the latest construction spending figures, which showed growth continuing in most industry sectors.

All Sectors Add Workers

Both nonresidential and residential construction saw gains.

Nonresidential building, specialty trade, and heavy and civil engineering construction firms grew by 8,400 workers in June and 99,800 from a year earlier.

Residential building and specialty trade contractors added 5,200 employees in June and 90,200 over the 12-month period.

“In a favorable sign for future construction growth, architectural and engineering services employment rose by 2.6 percent over the year,” the association reported.

Worker Shortages Loom

Ironically, the “relatively positive jobs report” for the sector underscores a potential problem, the association says: the need to address potential shortages of skilled and entry-level workers.

Construction companies face a “looming worker shortage,” as many laid-off workers have opted by now to leave the industry, according to Ken Simonson, the association's chief economist.

Associated General Contractors of America
Associated General Contractors of America

The Associated General Contractors of America say that a growing number of locations and construction segments are having difficulty finding workers with needed skills.

“The number of unemployed workers with construction experience has fallen to low enough levels that firms in a growing number of locations and segments are having trouble finding people with the needed skills,” said Simonson.

“Contractors have filled the gap so far by adding to workers’ hours but this ‘solution’ may be reaching its limit.”

Aggregate weekly hours of all new and existing construction employees expanded by 4.7 percent in June, as companies put more workers on overtime, the association reported.

Averting the Crisis

Averting future worker shortages will require action, the association said.

To that end, contractors urge education officials to rebuild skills-based, or vocational, educational programs designed to help prepare students for careers in construction and manufacturing.

The association also has pleaded to Congress and the Obama administration to reject “the arbitrary caps on construction workers that are currently included in the Senate’s immigration legislation.”

Capitol Building
Scrumshus / Wikimedia Commons

The AGC has urged lawmakers to reject "the arbitrary caps on construction workers" that are currently included in the Senate’s immigration legislation.

A comprehensive immigration bill that passed the Senate last month caps the construction industry at 15,000 temporary worker visas per year. AGC and other construction industry groups have long voiced concern that the cap would have a detrimental impact on the industry.

“Now that demand for construction is finally picking up, it is vital to ensure that the industry can find enough qualified workers,” said Stephen E. Sandherr, the association’s CEO.

“There are actions that policy makers should take now before a worker shortage cuts short the industry’s recovery.”

Construction Spending Uptick

Total construction spending in May totaled $875 billion, an increase of 0.5 percent from April 2013 and 5.4 percent since May 2012, according to the association’s analysis of the latest Census Bureau data.

Private residential spending rose 1.2 percent for the month and 23 percent from a year earlier. Meanwhile, private nonresidential spending dropped 1.4 percent in May and 0.9 percent year-over-year. Public construction spending gained 1.8 percent for the month but declined 4.7 percent over 12 months.

Multifamily, Power Construction Growth

The biggest jump in construction spending was in new multifamily construction, which rose 2.5 percent for the month and 52 percent year-over-year.

multifamily construction
Joe Mabel / Wikimedia Commons

Multifamily construction spending rose 2.5 percent in June, a 52 percent increase since the same month a year earlier.

New single-family construction rose 0.4 percent and 33 percent, respectively. Residential additions and renovation fell 2.7 percent in May but rose 5.1 percent over 12 months.

The largest private nonresidential category, power construction—which includes oil and gas field and pipeline projects, power plants, renewable power and transmission lines—rose 2.1 percent in May but slipped 1.5 percent from May 2012.

The second-largest nonresidential segment—manufacturing—plunged 8.1 percent for the month and 3.4 percent from May 2012. However, the manufacturing total for the first five months of 2013 combined was 5.4 percent higher than in January-May 2012.

The private lodging category, covering hotel construction and renovation, rose 1.6 percent in May and 22 percent over 12 months.



Tagged categories: Business conditions; Commercial Construction; Construction; Contractors; Economy; Jobs; Market; Residential Construction

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