The Building Tradesman Newspaper

Friday, October 04, 2019

U.S. construction eases back from robust level

By The Building Tradesman

NEW YORK –New U.S. construction starts dropped 6 percent over the month in August to a seasonally adjusted annual rate of $807.1 billion, according to a Dodge Data and Analytics report released Sept. 23.

The August decline breaks a string of three consecutive month-to-month gains for U.S. construction. By major sector, non-building construction in the U.S. (mostly infrastructure work) fell 15 percent in August, reversing the large increases made in the previous month when several notable projects started. The declines in residential and nonresidential building were milder – falling 1 percent and 3 percent respectively in August. Year-to-date through eight months, total U.S. construction starts were 5 percent lower than the same period a year ago

“The August decline was expected after July’s robust level of starts,” stated Richard Branch, chief economist for Dodge Data & Analytics.

“Furthermore, the year-to-date activity continued to suggest that this year’s levels are easing back from what was seen in 2018 – essentially mirroring the slowdown in overall economic growth.”

Michigan's construction industry, which lost 800 jobs (or .5 percent of the workforce) from July to August 2019, also took a small hit. After an up and down year for employment in 2019, Michigan now has gained 400 construction industry jobs since August 2018, a mild increase of .2 percent, ranking our state No. 38 in job gains during that time.

"Even more states probably would have posted gains in construction employment if firms could find enough people to hire," said Ken Simonson, the association's chief economist, on Sept. 20. "They are finding most craft positions hard to fill, even though average pay in construction pays is higher than the all-industry average in nearly every state."

AGC officials said contractors across the nation are taking steps to alleviate labor shortages, including hiking pay, expanding training programs and becoming more efficient. But they cautioned that many firms report labor shortages are affecting construction schedules and costs. 

The August statistics lowered the Dodge Index to 171 (2000=100) compared to 182 in July, marking the lowest reading for the Index since May.  Despite the month’s decline, the Index remains above its average of 167 for all of 2019.

By state, Texas added the most construction jobs over the year (+43,900 jobs, + 5.9 percent), followed by California (34,300 jobs, 4.0 percent), Florida (20,900 jobs, 3.8 percent), and Arizona (15,400 jobs, 9.7 percent).  North Dakota added the highest percentage of construction jobs over 12 months (12.1 percent, 3,100 jobs), followed by Nevada (11.7 percent, 10,500 jobs), Arizona, and New Mexico (9.2 percent, 4,300 jobs).

On the flip side, Louisiana lost the largest number and percentage of construction jobs (-10,100 jobs, -6.6 percent). Other states with large job losses include Ohio (-3,600 jobs, -1.6 percent), Maryland (-1,600 jobs, -1 percent), Vermont (-1,000 jobs, -6.6 percent) and Connecticut (-1,000 jobs, -1.7 percent).