The Building Tradesman Newspaper

Friday, July 21, 2017

Lots of upside for U.S. construction industry

By Jillian Otten

Construction jobs are up, the pay is higher, industry spending is steady and there's momentum aplenty. 

The nation's construction industry moved into summer in very good shape, with economic indicators pointing to a favorable future - but with a few problem areas. That's the word from the two groups that keep close tabs on the nation's construction industry.

"Construction firms added employees over the past year at nearly double the rate of the overall economy, but the record-low unemployment rate for construction workers shows companies are having to reach outside the industry to fill positions," said Ken Simonson, the Associated General Contractors' chief economist. "Finding any qualified workers will likely become even harder with low unemployment throughout the economy."

Employment in the construction industry totaled 6,896,000 in June, a gain for the month of 16,000—nearly double the 9,000 jobs added in the previous three months combined, the AGC reported July 7. The June level saw an increase of 206,000 jobs, or 3.1 percent, from a year ago.

The year-over-year growth rate was almost double the 1.6 percent rise elsewhere in the U.S. economy in total non-farm payroll employment. The building sector's unemployment rate in June virtually matched the rate for all U.S. workers at 4.5 percent, the lowest June jobless level for construction since the series began in 2000.

Wages are up, too. Average hourly earnings in the construction industry climbed to $28.82 in June, an increase of 2.5 percent from 2016.

Construction pays nearly 10 percent more per hour than the average non-farm private sector job in the United States, which pays $26.25 on average per hour.

The AGC said construction employment gains would likely have been higher if it were easier for firms to find workers to hire. Instead, the group said firms are asking current employees to work longer hours to keep pace with demand.

The industry's ongoing recovery from the Great Recession, while improving, has been choppy over the past several years, with all manner of spending and employment gains and corresponding month-to-month pullbacks in those areas. 

Construction spending in May totaled $1.230 trillion at a seasonally adjusted annual rate, unchanged from the upwardly revised April total, Simonson said. He added that the year-to-date increase of 6.1 percent for January through May 2017, compared with the same months of 2016, shows overall demand for construction remains positive but that the recent flattening of investment coincides with more frequent reports that contractors and home builders are stretching out completion times because they cannot find enough qualified workers.

In addition, the AGC said spending on most types of private construction has remained relatively flat from month to month so far in 2017, but at a higher level than in the same period of 2016. And by contrast, public investment in infrastructure has generally declined from last year's levels despite a pickup from April to May. "At this point in the year, it looks as if private demand for structures remains healthy, but gridlock in Congress and in several state governments will depress public infrastructure spending," Simonson said. 

Meanwhile, Dodge Data and Analytics reported on July 11 that their Dodge Momentum Index finds the U.S. construction industry "has exhibited substantial strength since mid-2016," with commercial construction up 11.8 percent in June 2017 vs. June 2016, and institutional work up 9.5 percent during the same time period. "The overall rising trend for both sectors continues to suggest that construction activity will remain healthy through the end of the year," Dodge said. Overall, the Momentum Index rose 1.1 percent from May to June 2017.