The Building Tradesman Newspaper

Wednesday, October 16, 2019

Steady as she goes for U.S. construction, overall economy

By The Building Tradesman

U.S. construction employment is up, spending is down, and industry wage gains are middling.

The early October monthly economic update by the federal Bureau of Labor Statistics on the general state of the U.S. construction industry - as well as the greater U.S. economy - continues a trend of steady if slowing growth.

"In September," said the BLS, reporting on the general U.S. economy on Oct. 4, "the unemployment rate declined by 0.2 percentage point to 3.5 percent. The last time the rate was this low was in December 1969, when it also was 3.5 percent. Over the month, the number of unemployed persons decreased by 275,000 to 5.8 million."

Meanwhile, the Engineering News Record said the construction industry's September unemployment rate "equaled its lowest monthly level in more than a decade, although the industry only gained 7,000 jobs during the month." The construction industry's September jobless rate fell to 3.2 percent in September from 3.6 percent  in August. In September 2018, the construction industry's jobless rate was 4.1 percent.

The U.S. construction industry saw an increase of 7,000 jobs in September 156,000 (+2.1 percent), over the past 12 months. Using those BLS numbers, the Associated General Contractors said the modest increase in construction employment "likely reflects tight labor conditions," a situation that the AGC has been pointing to for the past two years as putting a damper on growth.

"Contractors foresee plenty of projects to bid on, and nearly three-fourths of firms expect to add workers during the next 12 months, but most are finding it hard to find qualified workers to hire," said Ken Simonson, the AGC's chief economist. "That's not surprising, given that the total unemployment rate hit a 50-year low in September—a sign that workers are hard to come by throughout the economy."

The 2.1 percent growth in construction employment between September 2018 and September 2019 was the slowest in more than six years, the AGC said, but that the rate remained well above the 1.4 percent increase in total nonfarm U.S. payroll employment. Over the course of those 12 months, the construction industry’s workforce rose by 156,000, or 2.1 percent, for a total employment of 7.5 million.

Overall, BLS statistics revealed that U.S. employers hired a modest 136,000 additional workers last in September, a number that has been trending downward over the course of this year. 

"The most disappointing news in today’s report," said economist Elise Gould of the labor-backed Economic Policy Institute, "is slowing nominal wage growth. Nominal wages rose 2.9 percent year-over-year in September, which is slower than expected in an economy that has had historically low unemployment. The unemployment rate has been at (or below) 4.0 percent for the past 19 months. There’s a chance the recent low of 2.9 percent is a blip, but it’s certainly a troubling sign and something to watch in coming months especially after the deceleration experienced in the first half of 2019."