Construction Employment, Pay Rise in May; Unemployment Rate Shrinks; April Job Openings Set Record

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Submitted by the AGC

Construction employment, seasonally adjusted, totaled 7,664,000 in May, an increase of 36,000 from April and 283,000 (3.8%) year-over-year (y/y) from May 2021, according to AGC’s analysis of data the Bureau of Labor Statistics (BLS) posted today. Residential construction employment, comprising residential building and specialty trade contractors, rose by 16,700 in May and 128,000 (4.2%) y/y. Nonresidential construction employment—at building, specialty trades, and heavy and civil engineering construction firms—climbed by 19,400 for the month and 154,900 (3.6%) y/y. The number of unemployed jobseekers with construction experience dropped 39% y/y to 392,000, and the industry’s unemployment rate, not seasonally adjusted, declined from 6.7% in May 2021 to 3.8% last month. Average hourly earnings for production and nonsupervisory employees in construction rose 6.3% y/y, the steepest increase since December 1982 but slightly less than the 6.5% rate for the overall private nonfarm sector.

There were 494,000 job openings in construction, not seasonally adjusted, at the end of April, a jump of 141,000 (40%) from April 2021, BLS reported on Wednesday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. That was the largest total for any month in the 22-year history of the series. Hires increased by 14,000 (3%) y/y to 455,000. Openings exceeded hires for the fifth month in a row, a formerly rare occurrence. Layoffs and discharges fell by 34,000 (-26%) y/y to 95,000, the fewest for April in series history. Quits soared by 43,000 (24%) y/y to 221,000, the highest April total since 2001. 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.

Construction employment, not seasonally adjusted, rose y/y from April 2021 to April 2022 in 235 (66%) of the 358 metro areas (including divisions of larger metros) for which BLS posts construction employment data, fell in 62 (17%) and was unchanged in 61, according to an analysis AGC released on Tuesday. (BLS reports combined totals for mining, logging, and construction in most metro areas, to avoid disclosing data about industries with few employers.) Houston-The Woodlands-Sugar Land again added the most jobs (13,000 construction jobs, 6%), followed by the Dallas-Plano-Irving division (9,200 combined jobs, 6%); St. Louis, Mo.-Ill. (5,400 combined jobs, 8%); and the Seattle-Bellevue-Everett division (5,400 construction jobs, 5%). Cheyenne, Wyo. again had the highest percentage gain (32%, 1,100 combined jobs), followed by Decatur, Ill. (25%, 800 combined jobs) and Norwich-New London-Westerly, Conn.-R.I. (21%, 800 combined jobs). There was a new April high in 71 areas and no new lows, in series dating in most cases to 1990.

Construction spending (not adjusted for inflation) totaled $1.74 trillion in April at a seasonally adjusted annual rate, up 0.2% from the upwardly revised March total and up 12% y/y, the Census Bureau reported on Wednesday. However, without a deflator, it is unclear how much of the gain is in units vs. price. Most nonresidential construction categories declined for the month but rose y/y, while residential segments mostly posted monthly and y/y gains. Private nonresidential construction spending dipped 0.2% for the month but climbed 10% y/y. The largest private nonresidential segment—power—fell 1.5% for the month but was unchanged y/y (including electric power, down 2.3% for the month and 1.8% y/y, and oil and gas field structures and pipelines, up 2.4% in April and 5.0% y/y); followed by commercial, down 0.2% for the month but up 19% y/y (including warehouse, -0.9% and 19%, respectively, and retail, -3.6% and 14%); manufacturing, up 1.6% in April and 34% y/y (including chemical and pharmaceutical, -3.2% and -5.9%, and computer/electronic/electrical, -0.5% and 237%); and office, up 0.1% and 5.4%. Public construction spending fell 0.7% for the month but rose 1.8% y/y. The largest public segment, highway and street construction, lost 0.1% for the month but climbed 6.3% y/y. Public education construction declined 0.7% and 5.6%, respectively. Public transportation construction fell 5.3% and 0.6%. Private residential construction spending increased 0.9% for the month and 18% y/y. Single-family spending climbed 0.5% and 19%, respectively; owner-occupied improvements jumped 1.1% and 22%; and multifamily rose 0.8% and 3.1%

Economic activity in the services sector grew in May for the 24th month in a row,” the Institute for Supply Management reported today. All 18 services sectors reported paying higher prices for materials and services in May. Construction is listed among sectors that reported slower supplier deliveries (15 sectors), increase in orders (15), growth (14), increase in business activity (13), increase in employment (9), and increase in order backlogs (8). Items that are significant for construction reported up in price included aluminum products (6 months in a row); construction materials; diesel fuel (18 months); freight (13 months); polyvinyl chloride (PVC) products (9 months); and steel products (17 months). Some respondents listed steel products or copper products as down in priceItems listed in short supply included appliances (3 months), construction materials, steel products, transformers, and wire and cable.

“All 12 Federal Reserve districts have reported continued economic growth,” the Federal Reserve reported on Wednesday in the latest “Beige Book” summary of informal soundings of businesses by district. This edition covers information collected from late March through May 23. The district based in Chicago reported, “Construction and real estate activity decreased slightly on net over the reporting period. Contacts in both residential and nonresidential construction noted that higher labor and material costs continued to encumber activity, and that rising interest rates had also begun to weigh on demand. Multiple contacts mentioned that it was more cost effective to buy materials in advance of a project start than to purchase materials as needed once building began.” The St. Louis district reported, “Construction activity remains strong despite continued supply chain issues and increased input costs.”

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