The Building Tradesman Newspaper

Friday, October 02, 2015

Construction lull seen as short-term

By The Building Tradesman

It has been a good year for employment in Michigan's construction industry. But recently the job numbers have been moving in the wrong direction.

According to a Sept. 18 report by the Associated General Contractors of Michigan, for the second straight month, Michigan's construction employment has fallen: our state lost 4,700 industry jobs (-3.0 percent) from July to August 2015, the second-worst loss among the states in terms of job percentage. That came after Michigan dropped 1,500 jobs the previous month, or 1 percent of its workforce.

The AGC said that for a number of states, August was a bit of a cool-down month for employment, but the long-term outlook looks good. "While half the states added construction jobs in August, construction spending data and industry reports suggest demand for projects remains very strong," said Ken Simonson, chief economist for the AGC. "The apparent softness in hiring likely reflects contractors' difficulty in finding qualified workers."

There has also been some softness in the "Architecture Billings Index," but it's not seen as a long-term trend. The ABI is a good predictor for the future of the construction industry, and the American Institute of Architects reported on Sept. 23 that the index slipped to 49.1 in August, down from 54.7 in July.

“Over the past several years, a period of sustained growth in billings has been followed by a temporary step backwards,” said AIA Chief Economist Kermit Baker. “The fact that project inquiries and new design contracts continue to grow at a healthy pace suggests that this should not be a cause for concern throughout the design and construction industry.”

Michigan had 150,400 workers in the construction industry in August 2015, which was still 6,800 jobs (+4.7 percent) compared to August 2014. Our state was ranked No. 17 for job gains during that 12-month period. 

Top states for construction employment gains over the past year were Arkansas, Idaho, South Carolina, Iowa and Kansas.

The poorest performing states for construction employment included last-place West Virginia (-15.1 percent) preceded by Rhode Island, Mississippi and Ohio.

Neighboring Ohio lost 11,300 jobs or 5.7 percent of its workforce from August 2014 to August 2015. But the Buckeye State did gain this year from July to August, up 2,700 jobs or 1.5 percent.

AGC officials noted that the association released a survey in September that showed 86 percent of U.S. construction contractors reported having trouble filling hourly or salaried professional positions. They added that these shortages appear to be having an impact on the sector's recovery. "While construction employment increased in more than two-thirds of the states over the past year, these gains may fade in the near future unless the industry can attract more people to try construction as a career," said Stephen E. Sandherr, the association's chief executive officer.