The Building Tradesman Newspaper

Friday, August 10, 2018

No brakes on construction in Michigan

By The Building Tradesman

Busy, busy, busy.

Building trades employment in Michigan continues to be very strong, with the latest federal employment numbers further affirming our state's place as a construction hotbed.

Michigan's construction workforce added another 1,800 jobs between May and June this year. That's a very good 1 percent gain, but combine it with the total 13,700 construction industry jobs that have been created in Michigan from June 2017 to June 2018, and we're continuing to remain on our perch among the top handful of states when it comes to employment gains. Michigan's 8.1 percent gain in construction employment over that 12 month period ranked No. 3 among the states, second to only Arizona and Georgia. 

The people wearing hard hats are busy all over the country - only seven states saw falling construction employment during those 12 months, according to figures released July 20 by the Associated General Contractors, based on Bureau of Labor Statistics numbers.

"Construction is proving to be a reliable source of employment growth in nearly every state, and contractors are eager to hire even more workers," said AGC chief economist Ken Simonson. "But finding qualified workers remains a significant challenge as other industries compete for talent, more workers reach retirement age, and fewer young adults chose to pursue careers in construction."

The employment numbers were backed up by short-term, booming U.S. construction spending numbers, which rose 11 percent in June to a seasonally adjusted annual rate of $896.3 billion, after a 15 percent hike in May, according to Dodge Data & Analytics. Those numbers, which were buoyed by some large projects around the country, pushed the industry modestly higher out of the up-and-down "sawtooth" pattern that has typified the re-emergence of construction a decade after the Great Recession.

“Following the lackluster activity in April, the strength shown during May and June enabled the second quarter average for total construction starts to be up 3 percent from the first quarter, which itself was up 2 percent from the final three months of 2017," said Robert A. Murray, chief economist for Dodge Data & Analytics.  "On that basis, one can say that the expansion for construction starts continued at a modest pace during the first half of 2018. At the same time, it’s not expected that July will get the same support from large projects that took place in June.” 

Dodge said nonresidential building so far this year has seen gains for manufacturing buildings, educational facilities, and amusement-related facilities, while office building starts have stayed close to last year’s pace. Residential building, Dodge said, is "seeing surprising resilience," the public works sector is "showing widespread increases" this year, while the electric utility/gas plant sector continues to decline.

"Although the construction industry is facing increased headwinds during 2018," Murray said, "namely higher material prices and rising interest rates, these have yet to have a discernible negative impact on the broad level of construction starts.  On the plus side, the construction industry is benefiting currently from the tailwinds of a strong economy, some easing of bank lending standards, and greater funding for federal public works programs as the result of the omnibus appropriations legislation passed in March.” 

Only six states shed construction jobs from June 2017 to June 2018: North Dakota, Oklahoma, Kentucky, Missouri, New Jersey and South Carolina.

Worker wages are finally rising, too

WASHINGTON D.C. - The strong economy is boosting wages, too.

The U.S. Labor Department reported July 31 that employment wages rose 2.8 percent from June 2017 to June 2018 - the strongest gain since 2008.

"U.S. workers received their biggest pay increases in nearly a decade over the 12 months through June, a sign the strong labor market is boosting wages as employers compete for scarcer workers," reported the Wall Street Journal on Aug. 1.

The Journal said from 2001 to 2007, wages and salaries as measured by the employment-cost index increased 2.9 percent a year on average. Since the second quarter of 2009 and the succeeding Great Recession, wages had only risen an average of 1.9 percent per year.

According to the Associated General Contractors, construction worker wages are expected to do even better this year, rising an anticipated 3.4 percent after a 3.7 percent hike last year.