Skip to main content

Have we bottomed out? Signs point to more woe

Date Posted: July 9 2010

Construction employment in Michigan didn’t have a good month from April to May, and the year-to-year numbers are even worse.

But now, other states have caught up to Michigan’s construction misery index, moving our state from a regular top-ten unemployment state to a spot that’s closer to the middle of the pack in construction job losses over the past year.

Figures released June 22 by the Associated General Contractors of America show that Michigan’s construction industry lost 10,400 jobs from May 2009 to May 2010, a decline of 8.1 percent which ranked us “only” at No. 30 among the states. Washington State, which lost 15.6 percent of its construction jobs during that time, dropped the greatest number of jobs and was ranked No. 50.

“Construction workers will continue losing jobs until demand for new housing, office, retail and local public construction improves,” said Ken Simonson, the association’s chief economist. “Although the stimulus is helping, it is very likely that construction employment has yet to hit bottom in most states.”

Michigan might have been ranked even higher if not for a lousy month of April-to-May, where the AGC, citing federal labor statistics, showed our state losing a whopping 4,200 jobs – a 3.4 percent loss – tied for 6th worst in the nation.  Construction employment also declined in 24 other states during that period.

AGC officials said that private, state and local construction employment demand was unlikely to improve until next year at the earliest, given current vacancy rates and public finances. With economists predicting stimulus work will decline later this year, association officials urged Congress and the Administration to act on a series of long-delayed infrastructure measures.

They noted that passing the nine-months late surface transportation bill would boost employment and provide relief for a construction industry that loses an estimated $23 billion a year to traffic congestion. “Construction workers shouldn’t have to suffer because Congress is months late in doing its job,” said Stephen Sandherr, the association’s chief executive officer.

Meanwhile, an economic reading we rarely see before – the Architecture Billings Index – reported on June 23 that after three straight months of improving conditions, the ABI fell nearly three points, a substantial decline. It “reflects a continued decline in demand for design services,” the group said, which is an unfavorable harbinger for the construction industry.

“This dip is somewhat of a surprise since it appeared that conditions were pointing towards a recovery,” said American Institute of Architects Chief Economist Kermit Baker. “The overriding issue affecting the entire real estate sector is unusual caution on the part of lending institutions to provide credit for construction projects that apparently would be successful in this economic environment.”