The Building Tradesman Newspaper

Friday, February 03, 2017

December setback doesn't dim prospects for U.S. construction

By The Building Tradesman

A sizable decline in jobs in December dropped Michigan from one of the top states in construction employment in 2016, to a spot firmly in the middle.

Michigan lost 2,800 construction jobs from November to December 2016, a 1.8 percent decrease. That loss, coupled with gains by other states, dropped Michigan to No. 23 among the states for construction job creation from December 2015 to December 2016. The month prior, we were ranked No. 7 for the year. During those 12 months, Michigan did gain 4,100 jobs, and currently has a construction workforce of 156,200.

The numbers come from a Jan. 24 Associated General Contractors analysis of U.S. Bureau of Labor Statistics figures.

Michigan was one of 32 states to add construction jobs during 2016 "as a dearth of experienced workers kept contractors in many states from hiring as many employees as they would have preferred," the AGC said. Last year at this time, 44 states were reported in the plus category for jobs compared to the year prior. Yet, a survey that the AGC released last month found tremendous optimism among U.S. contractors, with 73 percent of respondents expecting to add to their headcount in 2017.

"Although the number of states reporting construction employment increases has dwindled, contractors are more upbeat than ever about the construction market and intend to hire more workers this year," said Ken Simonson, chief economist for the association. "However, the shortage of workers is their top concern and nearly three-quarters of contractors say they are having a hard time filling positions."

The survey found that 55 percent of contractor-respondents listed worker shortages among the biggest concerns for them and their business, while 73 percent said they were having a hard time filling salaried or hourly craft jobs.

            The jobs numbers showed that Florida and Nevada added the most jobs in 2016, while Illinois, Alabama and North Dakota experienced the largest declines.

The lower employment numbers were corroborated by lower construction spending: Dodge Data and Analytics reported on Jan. 24 that new construction starts in December slipped 5 percent to a seasonally adjusted annual rate of $613.0 billion.

"The latest month’s decline for total construction was due to sharply reduced activity for the nonbuilding construction sector, reflecting further erosion by public works as well as a steep plunge by the electric utility/gas plant category," Dodge said.  For all of 2016, Dodge reported that U.S. total construction starts advanced 1 percent to $676.5 billion, a considerably smaller gain than the 11 percent increase reported for 2015. 

“The construction start statistics over the course of 2016 revealed a varied pattern, with the end result being a slight gain for the year as a whole,” said Robert A. Murray, chief economist for Dodge Data & Analytics. “On a quarterly basis, growth was reported during the first and third quarters, while activity settled back during the second and fourth quarters. 

“In a broad sense, construction activity shifted to a more mature stage of expansion in 2016, characterized by a slower rate of growth for total construction compared to the 10-12 percent to gains of the previous four years. For 2017, more growth at a moderate pace is expected for total construction."

By sector in 2016, commercial building continued to rise, and institutional building regain upward momentum. Single family housing showed moderate improvement, while multifamily housing witnessed growth in numerous markets. On the negative side, public works settled back in 2016, and steep declines were reported for manufacturing plants and the gas plant portion of the electric utility/gas plant category.