The Building Tradesman Newspaper

Friday, March 31, 2017

Generally, good news for U.S. construction

By The Building Tradesman

The U.S. construction industry can't quite find momentum for a sustained run, but it is trending upward.

New construction starts in February rose 2 percent from January, according to a March 21 report by Dodge Data & Analytics. This was the second straight monthly increase in construction starts, following a 15 percent hike in January, but those two months followed four consecutive monthly declines to close out 2016. 

Meanwhile, construction employment jumped by 58,000 jobs in February, a number that was upwardly revised from January and amounted to an increase of 219,000 jobs, or 3.3 percent compared to February 2016. And, U.S. construction spending dropped 1 percent from December to January, as we reported in our last issue, but was up 3.1 percent compared to the same time a year prior.

"While construction employment is growing at a healthy clip overall, there are many pockets of decline across the map and even within states or metro areas," said Ken Simonson, the Associated General Contractors' chief economist. "These shifts, depending on location, may reflect a shortage of skilled workers available to hire, a lack of funding for infrastructure and other projects, or broader economic trends."

Michigan's construction employment has generally been middle of the pack or near to the top among the states, and it enjoyed a spot ranked at No. 9 in industry jobs gained, the AGC reported on March 13. Michigan had 161,300 construction workers in January 2017, an increase of 9,100 jobs (or 6.0 percent) compared to a year ago.

AGC officials said many more firms would benefit from the growing demand for construction that comes with new infrastructure investments, while many others would benefit from new measures to boost the supply of qualified workers to hire.

Dodge Data and Analytics said much of February’s advance came from a strong performance by the public works sector, led by the start of a $1.4 billion natural gas pipeline in Ohio, West Virginia, and Pennsylvania, plus an improved level of highway and bridge construction. 

"Construction employment growth would almost certainly be more widespread if we were investing more in our infrastructure and rebuilding systems for recruiting and preparing new workers," said Stephen E. Sandherr, the association's chief executive officer. "The fact is that there are many markets in this country where firms need more work, and many others where firms need more workers."

Dodge reported that nonresidential building made a partial retreat after a strong January performance, yet still remained slightly above its average monthly pace during 2016.  Residential building in February also settled back. During the first two months of 2017, total construction starts were down 4 percent from the same period a year ago, which included elevated amounts for the often volatile manufacturing plant and electric utility/gas plant categories. 

“The first two months of 2017 provide evidence that construction starts are still trending upward, even with the loss of momentum that occurred towards the end of 2016,” said Robert A. Murray, chief economist for Dodge Data & Analytics.

“The subdued performance by public works and electric utilities in recent months had restrained the level of total construction starts, so their improved activity in February is a welcome development,” Murray continued.  “Also welcome during the first two months of 2017 is the strength shown by nonresidential building, and especially its institutional segment. The strength shown by institutional building so far in 2017 suggests that it will now make a more substantial contribution towards keeping the upturn for nonresidential building going.”