Construction sees healthier spending
Construction spending dipped from October to November , but resolution of the uncertainty regarding federal taxes for 2013 should unleash more private construction investment, according to an analysis of new federal data released Jan. 2 by the Associated General Contractors of America.
Association officials warned, however, that unresolved issues about federal construction spending would continue to hold down public construction spending.
“Preliminary data from the Census Bureau for November shows overall construction spending slipped 0.3 percent from October’s total after seven months of steady gains,” said Ken Simonson, the association’s chief economist. “The more significant comparison, however, is with year-ago levels, and the November report shows a respectable 7.7 percent gain over the past 12 months.”
Simonson noted that private single- and multi-family spending continued growing strongly. Spending on new single-family houses climbed 1.3 percent for the month and 29 percent year-over-year, while multi-family spending rose 0.5 percent and 46 percent, respectively.
“Private nonresidential construction has been in a holding pattern for the past several months, but (the Jan. 1) passage of a tax bill should encourage many businesses to go ahead with projects they have held in reserve,” Simonson predicted. He added that public construction continues to be a drag on the industry, sinking 2.6 percent in November 2012 compared to November 2011.
Construction sees better jobs stats, too
The general trend of higher construction spending (see above) was reflected in improved employment gains in the building trades in 2012.
The Bureau of Labor Statistics (BLS) reported that the construction industry added 30,000 jobs in December – the largest month-to-month increase in two years – and 118,000 jobs for all of 2012. The figures show that 1.1 million construction workers (13.5 percent of the industry) were officially jobless at the end of 2012, down from 1.33 million – one out of six – at the end of 2011.
The industry unemployment rate fell from 16 percent from a year earlier, indicating that formerly unemployed construction workers are leaving the industry at a faster rate than they are being rehired, says the Associated General Contractors.
And construction union leaders say the jobless data under-reports the distress among the building trades workforce, as a worker who’s working even one day – in the week BLS uses for its counts – is considered employed.
The improved numbers in construction employment in 2012 reflected the slowly improving economy as a whole. On Jan. 4, the BLS reported that the nation’s economy added 155,000 new jobs in December and the jobless rate was unchanged from November ’s adjusted 7.8 percent. The job gains reflect 34 straight months of positive, but slow job growth.
“Deep problems remain in our economy and labor market – under-employment remains at 14.4 percent, wages are barely growing, and too many workers are seeing their skills atrophy as they sit on the sideline of our economy,” said AFL-CIO President Rich Trumka. “Our urgent focus must be on investment that creates jobs and lays the foundation for sustainable growth and shared prosperity.