Construction Employment Climbs in June; Job Openings Set Record High for Month in May

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Construction employment, seasonally adjusted, totaled 7,670,000 in June, an increase of 13,000 from May and 292,000 (4.0%) year-over-year (y/y) from June 2021, according to AGC’s analysis of data the Bureau of Labor Statistics (BLS) posted on Friday. Residential construction employment, comprising residential building and specialty trade contractors, fell by 4,100 in June (the first decline in 14 months) but rose by 121,400 (4.0%) y/y. Nonresidential construction employment—at building, specialty trades, and heavy and civil engineering construction firms—climbed by 16,500 for the month and 170,300 (3.9%) y/y. The number of unemployed jobseekers with construction experience fell 47% y/y to 385,000, and the industry’s unemployment rate, not seasonally adjusted, declined from 7.5% to 3.7% y/y to the lowest June rate in the 23-year history of the data. Average hourly earnings for production and nonsupervisory employees in construction rose 6.0% y/y, slightly less than the 6.4% rate for the overall private nonfarm sector.

There were 466,000 job openings in construction, not seasonally adjusted, at the end of May, a jump of 130,000 (39%) from May 2021, BLS reported on Wednesday. That was the largest May total in the 22-year history of the series. Hires increased by 53,000 (14%) y/y to 437,000. Openings exceeded hires for the sixth month in a row, a formerly rare occurrence. The fact that job openings increased so much despite a step-up in hiring suggests contractors expect demand for projects to remain strong in the near term. Layoffs and discharges fell by 47,000 (-35%) y/y to 88,000, the fewest for May in series history. Quits soared by 54,000 (36%) y/y to 205,000, the highest May total since 2006. Together, the record-low layoffs and low unemployment rate and the record high for job openings imply contractors will have trouble finding all the workers they seek.

Reports were mixed regarding materials prices and availability. On Tuesday, CertainTeed Gypsum announced “a wallboard and finishing price increase effective on all shipments starting on August 1” of 25%-35% for wallboard products and 20% for “ready mix, setting compounds, and tape….there could be further increases throughout the year.” Distributor Foundation Building Materials posted on June 29, “Allocation on drywall has been implemented in most parts of North America. Lead times are still lengthy on all specialty gypsum products. While commodity products lead times are closer to normal, allocation has limited supply in most markets. Continued issues with raw materials such as vermiculite, latex, wax, and fiberglass mat has created production challenges for manufacturers….Unexpected significant increases have been announced for [ceilings]. Mineral fiber and fiberglass ceilings announced a 17% price increase effective in July….while grid products announced a price increase of 14% in [May. Additionally,] wood products are experiencing extremely elongated lead times….Fiberglass insulation lead times have improved since the end of 2021. The manufacturers are still in tight supply. Mineral wool insulation lead times have peaked…Spray foam insulation, open cell products lead times and availability have improved. Closed cell products remain in a very limited supply situation.” Futures prices for metals used in construction materials have fallen sharply, after spiking when Russia attacked Ukraine in March. “The London Metal Exchange Index, which focuses on aluminum, copper, nickel, zinc, tin, and lead, and the S&P GSCI Industrial Metals Index wrapped up the second quarter with the largest percentage declines since 2008,” the Wall Street Journal reported today. “On Thursday, [near-month copper futures] rose 4.8% to $3.572 a pound but remain off nearly 30% from their all-time highs.” Readers are invited to send price and availability information to ken.simonson@agc.org.

The outlook for new office construction remains bleak. “Thanks to more office supply and companies squeezing more employees into smaller spaces, the share of U.S. office space leased today is far lower than it was at the start of the 2001 recession or the subprime crisis,” the Journal reported on Wednesday. “While office demand continues to be strong in many Sunbelt cities, vacancy rates in cities like New York, San Francisco and Chicago rose during the pandemic, in some cases to the highest levels in decades.”

“Economic activity in the services sector grew in June for the 25th month in a row,” the Institute for Supply Management reported on Wednesday. All 18 sectors reported growth and also paying higher prices for materials and services. Construction is among the sectors that reported slower supplier deliveries (16 sectors), increase in business activity (15), increase in employment (7), and increase in order backlogs (10) but was one of two reporting a decrease in new orders. Items significant for construction reported up in price included aluminum products (7 months in a row), construction materials (2 months), diesel fuel (19), paint, polyvinyl chloride (PVC) products (9), and steel products (18), transformers, and wire cable. Lumber, oriented strand board and PVC products were listed as down in price. Items listed in short supply included appliances (4 months), diesel fuel (2 months), and transformers (2 months).

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