The Building Tradesman Newspaper

Friday, July 07, 2017

Construction continues along prosperous path

By The Building Tradesman

The path forward for the construction industry in Michigan and across the nation looks to be headed toward a period of growth, even if the trend lines are a bit uneven.

Employment numbers released last month show that Michigan is building on what has been a strong market. Our state enjoyed a 5.7 percent gain in construction employment from May 2016 to May 2017, representing an increase of 8,900 jobs, ranking us No. 13 among the states during that one year period.

But overall in the U.S., new construction starts edged up in the U.S. only a single percentage point from April to May, Dodge Data and Analytics reported June 21. And that same report said through the first five months of 2017, total U.S. construction starts were $274.3 billion, down 5 percent from the same period in 2016. 

“While May revealed slight improvement over April, the pace of expansion so far this spring has generally slowed following the elevated activity in the first quarter,” said Robert A. Murray, chief economist for Dodge Data & Analytics. “This is consistent with the up-and-down behavior that’s often been present in the current expansion, and a continuation of this pattern means that renewed strengthening can be expected in the months ahead.” 

A new measuring stick for the construction industry announced June 15 - the USG + U.S. Chamber of Commerce Commercial Construction Index - also sees strength in the industry. "Nearly all contractors surveyed – 96 percent – expect revenues to grow or remain stable this year compared to 2016," the index said, "with 40 percent expecting an increase and only 3 percent expecting a decrease in revenue."

Murray said factors that should help further the expansion of the construction industry include low long-term interest rates, passage of numerous state and local bond issues for public works and institutional building, as well as hoped-for increased infrastructure construction under the Trump Administration. 

There were 42 states, including Michigan, that added construction jobs between May 2016 and May 2017. However, keeping in mind the see-saw nature of the industry in recent years, between April and May 2017, 25 states and the District of Columbia lost construction jobs, according to an analysis by the Associated General Contractors of America

"There is still plenty of private-sector demand for construction projects, so it is likely that some states with monthly employment declines have a shortage of workers rather than a slowdown in work," said Ken Simonson, chief economist for the association. "Given the low unemployment rate in most states, it is hard for contractors to find new construction workers, let alone experienced ones."

Rhode Island added the highest percentage of new construction jobs from May 2016 to May 2017 (12.8 percent, +2,300 jobs), followed by Nevada (10.9 percent, +8,100 jobs), and Oregon (10.9 percent, +9.800 jobs)

On the other end of the rankings, the District of Columbia lost the highest percentage of jobs for the year (-7.6 percent, -1,200 jobs), followed by Alaska (-5.5 percent, -900 jobs) and Mississippi (-5.1 percent, -2,200 jobs).