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Construction Jobs, Spending Hit Highs

Monday, March 17, 2014

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It’s shaping up to be a good year for the U.S. construction industry, which is seeing its highest employment rate in nearly five years and its steepest spending increase since 2006, the Associated General Contractors of America says. 

The construction industry added 15,000 jobs in February, raising the industry's employment to its highest level—almost 6 million jobs—since June 2009, AGC reported March 7.

AGC also announced that this January saw the greatest year-over-year increase in total construction spending since 2006, with public construction, private residential and nonresidential spending all contributing to the jump.

Associated General Contractors of America
AGC

All construction segments added workers in the past year, and the industry reached its highest employment total in four and one-half years, according to AGC.

However, the association warned again that the industry may face a shortage in skilled workers to fill these new jobs, and that spending could backpeddle if Congress doesn't deal with rapidly declining federal funding. 

Outpacing the Economy

"The rate of construction hiring has outpaced job growth in the overall economy for the past year," said Ken Simonson, AGC's chief economist. "During that time, all construction segments have added workers." 

Construction employment reached 5,941,000 in February, its highest total in 4.5 years. This is an increase of 152,000 (2.6 percent) over last year. 

The residential construction segment took the lead, adding 1,700 workers in February and 101,200 (4.8 percent) over 12 months.

Since January, the nonresidential construction segment added 12,700 employees; 50,600 employees (1.4 percent) were added since February 2013. 

The unemployment rate was 12.8 percent in February 2014 and 15.7 percent in February 2013. Workers who were last employed in construction and were actively looking for jobs saw their unemployment rate drop to its lowest February number since 2008.

The unemployment rate for construction workers is less than half the rate of February 2010, when it was at 27.1 percent, Simonson said. The industry added 438,000 jobs from February 2010 to February 2014, while the number of unemployed workers who last worked in construction declined by 1.34 million, according to the association. 

Looking forward, Simonson says multifamily, manufacturing and oil- and gas-related facilities will generate "particularly strong demand for workers."

Wanted: Skilled Workers

Many firms have been reporting difficulty in finding skilled workers, AGC noted.

"In the past four years, nearly a million experienced workers have left the industry for jobs in other sectors, retirement or school. They are no longer available for immediate recall to construction jobs," Simonson said. 

In a nationwide survey by AGC earlier this year, two-thirds of respondents said they were having a hard time finding qualified workers to fill key positions and expected workforce conditions to remain tough for the next year. 

construction industry employment
AGC

"Unless we find a way to get more students to consider and train for careers in construction, many firms will get to a point where they don't have enough workers to keep pace with demand," AGC said.

The association has urged federal, state and local officials to enact measures that will make it easier to establish training programs at schools, firms and local construction associations. 

"Unless we find a way to get more students to consider and train for careers in construction, many firms will get to a point where they don't have enough workers to keep pace with demand," said Stephen E. Sandherr, AGC's CEO. 

Spending Gains

The increase in construction spending from December to January over the prior-year figures trumped "uncommonly adverse weather conditions," Simonson said. 

The monthly gains were from single-home and multifamily construction, but private nonresidential work is expected to bounce back in the next few months, he added. 

January totals for construction put in place reached $943 billion—0.1 percent higher than the December total, which was up $12 billion from the initial estimate. Year-over-year, this January was 9.3 percent higher than January 2013—the fastest rate of growth in total construction spending since May 2006, according to AGC. 

Private residential construction spending increased by 15 percent over the last 12 months, and by 1.1 percent in January. 

Private nonresidential construction spending saw a decrease of 0.2 percent for the month, but jumped by 9.7 percent compared to January 2013. 

The public construction sector slipped 0.8 percent for the month, but increased 2.5 percent from the prior year. 

Construction spending
© iStock / JacobH

Construction put in place saw its fastest year-over-year growth rate in January 2014, with an increase of  9.3 percent over January 2013.

AGC's report was based on an analysis of Census Bureau data on construction spending, but Simonson said the bureau's estimates for January and December may not accurately reflect the impact of winter weather. 

Questionable Funding Future

Preliminary data shows highway and street construction spending jumping 3.7 percent in January and 15 percent year-over-year, but AGC warned that funding shortfalls could lead to a quick decline in federal investments in highway repairs, "undermining the sector's recovery." 

"Public construction is up for now on a year-over-year basis, but funding remains questionable," Simonson said.

In January, the Department of Transportation announced that the federal Highway Trust Fund could go broke as soon as August. 

President Obama has since proposed a $302 billion, four-year surface transportation reauthorization budget. 

But Sandherr cautioned: "Even with spending on the rise, the construction industry remains vulnerable to any sudden downturn in demand. Letting highway investments lapse will only hurt overall economic growth and put more construction jobs at risk." 

AGC has urged Congress and the President to work together to pass new transportation funding measures as quickly as possible. 

   

Tagged categories: Associated General Contractors (AGC); Construction; Department of Transportation (DOT); Economy; Funding; Jobs; Residential Construction; Roads/Highways

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