The Building Tradesman Newspaper

Friday, August 07, 2015

Construction expansion continues, with Michigan still leading the pack

By The Building Tradesman

Michigan steered around a bump in the road for U.S. construction between May and June this year, and - as it has for much of this year - continued to be an industry hotbed.

Michigan ranked No. 3 among the states in construction employment gains between June 2014 and June 2015, gaining 14,000 construction jobs for a 9.8 percent increase. That percentage was only behind Idaho (+12.9 percent) and Nevada (+11.1 percent). The numbers come from a July 21 employment report released by the Associated General Contractors of America.

While Michigan was among 39 states that gained jobs during that 12-month period, in the short-term, overall construction employment took a dip from May to June of 2015 in 25 states. (Michigan's construction workforce gained 1.2 percent that month, and currently stands at 156,300 workers).

"While the year-over-year totals remains relatively positive, the monthly construction employment figures are troubling," said Ken Simonson, the association's chief economist. "Investing in transportation infrastructure will make it easier for many firms involved in highway and transit construction to add new staff."

Dodge Data and Analytics also keeps an eye on the U.S. construction industry, and its July 22 report found that new construction starts dropped 15 percent in June compared to "an especially strong May." Still, during the first six months of 2015, the report said total construction starts on an unadjusted basis were reported at $336 billion, up 23 percent from the same period in 2014.

“Notwithstanding the up-and-down pattern that’s been present on a monthly basis during the first half of 2015, the construction start statistics show that the expansion continues, with a few nuances,” said Robert A. Murray, chief economist for Dodge Data & Analytics. “The 23 percent year-to-date increase for total construction overstates the strength of the expansion, and the underlying rate of growth is likely around 10 percent."

He said nonresidential construction in the U.S. has "maintained the upward track established last year," and "public works construction revealed surprising strength during the first half of 2015." In the meantime, the commercial building segment "showed some deceleration during the first half of 2015," while there's growth in multifamily housing and single-family housing "is now edging upward."

According to the AGC, losing the highest percentage of jobs during the 12 months before June 2015 were West Virginia (-12.8 percent, -4,300 jobs), Rhode Island (-9.6 percent, -1,600 jobs); Mississippi (-7.9 percent, -3,900 jobs) and Ohio (-7.9 percent, -3,900 jobs).

AGC officials said one of the challenges facing the construction industry is uncertainty about future federal funding levels for highway and transit repairs and improvements. The AGC urged members of both parties to work together to address growing problems with the country's aging transportation infrastructure.

"Passing a long-term highway and transit bill will provide the kind of funding certainty many construction firms need to expand payrolls and invest in new equipment," said Stephen E. Sandherr, the association's chief executive officer. "The series of short-term transportation funding extensions Congress has passed has clearly had a negative impact on the construction industry's recovery."