The Building Tradesman Newspaper

Friday, November 01, 2013

September numbers buoy construction

By The Building Tradesman

Construction employment rose by 20,000 in September and the industry’s unemployment rate fell to a six-year low of 8.5 percent, while construction spending increased for the fifth consecutive month in August, according to an analysis of new government data released Oct. 22 by the Associated General Contractors of America.

Association officials cautioned that the data does not address any potential impacts from the recent federal government shutdown.

“Both of these reports show the industry was doing relatively well before the federal government shutdown forced many firms to hit the pause button,” said Ken Simonson, the association's chief economist. “But the shutdown likely disrupted a wide variety of projects and may have caused private investors and developers to delay decisions about new projects or plant expansions. As a result, future spending and hiring gains may be weaker.”

Construction employment totaled 5,826,000 in September, a gain of 20,000 from the August tally, which was revised up by 8,000 from the Labor Department’s initial estimate. The September figure is 3.4 percent higher than in September 2012, while aggregate weekly hours of all construction employees rose 4.2 percent over the year, indicating that companies are adding to existing workers’ hours in addition to hiring new employees. Employment climbed for the month and year in both residential and nonresidential construction.

Dollar-wise, new construction starts in September advanced 13 percent from August to a seasonally adjusted annual rate of $556.0 billion, according to an Oct. 16 report by McGraw Hill Construction. Over the first nine months of 2013, construction starts were up 2 percent compared to the same period in 2012.

The industry’s unemployment rate dropped sharply over the past year, from 11.9 percent in September 2012 to 8.5 percent in September 2013 - the lowest September rate since 2007. The steep decline in the number of unemployed former construction workers suggests companies may have trouble finding experienced workers if the volume of projects continues to expand, as it did in August, the AGC said.

Total construction spending, as reported by the Census Bureau, climbed 0.6 percent in August from an upwardly revised July figure and 7.1 percent from August 2012.

The AGC warned that the industry’s recovery was likely impacted by the federal government shutdown. Public spending is one area that continues to lag.

“After the downward trend that’s been under way from 2009 through the first half of 2013, the institutional building sector may now be starting to stabilize, which is necessary for total nonresidential building to register growth," said Robert Murray, vice president of economic affairs for McGraw Hill Construction. "At the same time, the recent Congressional impasse over federal appropriations for fiscal 2014 and raising the debt ceiling only adds to the sense of uncertainty, which hampers renewed expansion for nonresidential building going forward.”