Construction jobs, spending hit highest levels since early 2010, helped by mild weather

Posted by tED magazine on Tuesday, February 07, 2012

By Ken Simonson

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Nonfarm payroll employment rose by 243,000, seasonally adjusted, in January, and by 1,953,000 (1.5%) over the past 12 months, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate dropped from 8.5% in December to 8.3% in January, seasonally adjusted (8.8%, not seasonally adjusted). Construction employment rose by 21,000 to a two-year high of 5,572,000, following an upwardly revised gain of 31,000 in December. Employment in both months may have benefited from widespread mild and dry weather. The January total was up 116,000 (2.1%) from a year earlier but still 28% below the peak set in April 2006 and no higher than in 1996. Heavy and civil engineering construction employment grew by 2.6% or 21,000 jobs; nonresidential building and specialty trade contractors by 2.0 % (17,000 jobs); and residential building and specialty trade contractors by 2.1% (41,000 jobs). The unemployment rate for construction workers was 17.7% in January, not seasonally adjusted, vs. 22.5% in January 2011. (BLS does not seasonally adjust industry unemployment rates.)

Construction spending in December reached a 20-month high of $816 billion at a seasonally adjusted annual rate, an increase of 1.5% from November and 4.3% from December 2010, the Census Bureau reported on Wednesday. However, spending for 2011 as a whole dropped for the fifth straight year, down 2.0% from 2010 and 34% from the record set in 2006. Private nonresidential spending performed best for the month and the full year, climbing 3.3% in December and 2.4% in 2011 compared with 2010. In descending order of current size, the largest segments were power (including oil and gas), up 3.2% in December and 17% for the year; manufacturing, 14% and -3.6%, respectively; commercial (retail, farm and warehouse), 0.1% and 6.4%; health care, 1.8% and -4.0%; and office, -0.5% and -7.0%. Public construction spending edged up 0.5% for the month but sank 6.5% for the year. Highway and street construction climbed 1.8% in December but dropped 4.5% from 2010 to 2011; educational, -0.6% and -5.3%; sewage and waste disposal, 0.5% and -12%; and nonhighway transportation, 0.6% and -13%. Private residential spending rose 0.8% for the month but declined 1.1% in 2011. Residential improvements inched up 0.2% and 0.3%; new single-family, 1.5% and -5.1%; and new multifamily, -0.3% and 0.3%.

Real (net of inflation) gross domestic product (real GDP) increased at a seasonally adjusted annual rate of 2.8% in the fourth quarter of 2011, up from 1.8% in the third quarter, the Bureau of Economic Analysis (BEA) reported on January 27. Real private investment in nonresidential structures tumbled 7.2%, after expanding 14% in the third quarter. (BEA includes wells and mines in nonresidential structures.) Real residential investment jumped 11%, following a third-quarter gain of 1.2%. Real government investment in structures slipped 0.5%.

Seasonally adjusted nonfarm payroll employment increased in 239 metropolitan areas from December 2010 to December 2011 (not seasonally adjusted), decreased in 127, and remained unchanged in 6, BLS reported on Wednesday. Construction employment rose in 128 of 337 metro areas for which BLS provides industry data (including divisions of larger areas), fell in 148 and was stable in 61, an AGC analysis showed. BLS combines mining and logging with construction in most metro areas to avoid disclosing data about industries with few employers. Lake County-Kenosha County, Ill.-Wis., added both the most and the highest percentage of new construction jobs (33%, 3,900 construction jobs). Other areas adding a large number of jobs included Edison-New Brunswick, N.J. (3,700 combined jobs, 11%) and Portland-Vancouver-Hillsboro, Ore.-Wash. (3,600 combined jobs, 8%). The largest job losses were in the city of Philadelphia (-4,800 combined jobs, -7%); New York City (-4,600 combined jobs, -4%); and Dallas-Plano-Irving, Texas (-4,500 combined jobs, -4%). The Logan, Utah-Idaho area (-23%, -700 combined jobs) lost the highest percentage, followed by Wilmington, N.C. (-20%, -1,800 combined jobs).

“Industries and occupations related to health care, personal care and social assistance, and construction are projected to have the fastest job growth between 2010 and 2020,” accounting for 25% of all new jobs this decade, BLS wrote in issuing 2010-2020 employment projections on Wednesday. “Despite rapid growth in the construction sector [1.8 million jobs or 2.9% per year], employment in 2020 is not expected to reach its pre-recessionary annual average peak of 7.7 million in 2006….More than one-fourth of the projected fastest-growing occupations are related to construction….But employment in most construction occupations is not expected to reach pre-recession levels.” The construction occupations that are projected to add the most jobs are construction laborers, 212,000 jobs or 21%, and carpenters, 196,000 jobs, 20%. The fastest growth among construction occupations is projected for helpers—masons and tile- and marble-setters, 60% or 18,000 jobs; helpers—carpenters, 56%, 26,000 jobs; and reinforcing iron and rebar workers—49%, 9,000 jobs. The need to replace workers who retire or otherwise permanently leave an occupation will exceed job growth in four out of five occupations, such as the 212,000 projected replacement carpenters (vs. growth of 196,000 jobs).

The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved.