Construction employment

U.S. Construction Adds 11,000 Jobs in July, Nonresidential Still Far Below Pre-Pandemic Levels

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Construction employment – both nonresidential and residential – totaled 7.42 million as of July 31, an increase of 1.5 percent over June, but the lion’s share of that gain came from hiring in the residential sector.

AGC of America Chief Economist Ken Simonson said soaring materials costs, long or uncertain delivery times and hesitancy by nonresidential project owners to commit to construction are the factors contributing to a still-stalled pace of commercial construction across the U.S.

The numbers hail from an August 6 government data analysis by the AGC.

“Recovery has been especially slow in infrastructure construction,” Simonson said.

Construction employment in July represented a gain of 11,000 jobs following three months of job losses, according to Simonson, however the rebound was limited to residential and specialty trade contractors. Nonresidential building and infrastructure construction firms continued to lose workers.

Residential building contractors including single-family homebuilders added 8,399 employees in July, while employment was unchanged among residential specialty trade contractors. Simonson said the two residential segments have added a total of 58,500 employees, or 2.0 percent, to their workforce nationwide since February 2020.

In contrast, nonresidential building contractors shed 2,500 employees in July. Employment declined by 2,100 among heavy and civil engineering construction firms, the segment most connected with building and rehabbing infrastructure. Nonresidential specialty trade contractors added 7,500 employees last month.

Following the huge loss of jobs between February and April 2020 at the start of the pandemic, infrastructure-centric contractors have added back only 37 percent of lost jobs. According to the AGC analysis, nonresidential building and specialty trade contractors have each regained about 60 percent of lost workers, while the total nonfarm payroll economy has recouped 75 percent of workers.

“There are an unprecedented number of construction material price increases,” said Simonson. “The problems of these extreme price increases and long lead times for production or delivery to project sites mean fewer construction workers are being employed. Some owners are delaying project starts, adding to the drag on industry employment.”

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Construction employment falls in May; hourly earnings premium, hires decline in April; openings soar

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Construction employment, seasonally adjusted, totaled 7,423,000 in May, a drop of 20,000 from April and the third decline in the past four months, according to AGC’s analysis [ https://AGCA.informz.net/AGCA/data/images/Employment table_May_PDF.pdf ] of Bureau of Labor Statistics (BLS) data posted [ https://www.bls.gov/news.release/empsit.nr0.htm ] on Friday The May total was 225,000 (-2.9%) below the pre-pandemic peak in February 2020. The gap widened between residential and nonresidential employment gains. Residential construction employment, comprising residential building and residential specialty trade contractors, edged up by 1,900 in May, putting the total 35,000 (1.2%) higher than in February 2020. Nonresidential construction employment—building, specialty trades, and heavy and civil engineering construction—shrank by 21,800 in May and was 260,000 (-5.6%) below the February 2020 level. A total of 642,000 former construction workers were unemployed in May, a sharp decline from May 2020 but the second-highest May level since 2014. The industry’s unemployment rate in May was 6.7%, compared to 12.7% in May 2020.
 
The BLS report also covers average hourly earnings by industry, with a one-month lag for subsectors. For total construction, hourly earnings in April averaged $32.59, 8.0% more than the average for the nonfarm private sector. However, over the past two years this premium shrank by 2.2 percentage points from 10.2% in April 2019, implying that the financial attractiveness of construction may be diminishing as other sectors that are expanding faster raise pay to attract more workers. The premium diminished the most for employees of heavy and civil engineering construction firms (-4.5 points, from 16.0% above the private-sector average in April 2019 to 11.5% in April 2021), followed by residential building firms (-2.7 points, from an 8.8% premium to 6.0%), specialty trade contractors (-1.0 points, from a 6.1% premium to 5.0%), and nonresidential building firms (-0.9 points, from a 25.4% premium to 24.5%).
 
There were 357,000 job openings in construction, seasonally adjusted, at the end of April, BLS reported [ https://www.bls.gov/jlt/ ] on Tuesday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. Hires in April totaled 335,000 or 4.5% of the employment total for the month. Apart from the pandemic-depressed 3.1% rate in 2020, the rate was the lowest rate of hires for April in the 21-year history of the series, while the job openings rate (4.6% of filled and unfilled jobs) was the second-highest total for any month since the series began in December 2000. That is consistent with reports from many contractors that they are having a very hard time hiring workers. (JOLTS data combines nonresidential construction with residential, and it is not possible to tell if the demand and openings are coming from both segments of the industry.)
 
The Dodge Momentum Index jumped 9.1% in May from the revised April reading, Dodge Data & Analytics reported [ https://www.construction.com/news/Dodge-Momentum-Index-Increases-In-April-2021 ] on Monday. The index “is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year….May’s jump was the result of a large increase in commercial planning activity, which posted its strongest month-over-month increase since October 2017. Institutional planning, meanwhile, fell by less than one percentage point. Commercial planning had been in a holding pattern over the last four months, but broke out in May due to several sizable data center, office, and warehouse projects that peaked in a 13-year high for the commercial component of the Momentum Index. While essentially flat in May, institutional planning remains at levels not seen since 2009. On a year-over-year basis, both commercial and institutional planning were up from May 2020 (38% and 47% respectively). The Momentum Index overall was also 41% higher than in May 2020….The rising trend in planning activity is a good sign that the economic recovery is starting to spread into the construction sector. However, these projects are unlikely to have an impact on construction starts this year. Rising material prices and a continued shortage of skilled labor have led to project delays. On the upside, construction starts are shaping up for a healthy increase in 2022.”
 
Readers continue to report materials price increases, some immediate or retroactive, and supply-chain disruptions. A reader received a notice on June 5 from a structural steel supplier that “Effective with orders received after 8:00 pm EST, Friday June 4, [m]erchant products will be increased by…$70 ton.” A commercial furniture supplier notified customers on June 8, “Foam shortages persist, and foam pricing continues to rise[, making] it necessary to adjust pricing on select pieces[, ]effective June 7.” A Texas concrete supplier wrote to customers on June 4, “Effective August 1,…we will be increasing the price of all concrete products by $3.00 per cubic yard[, ] due to labor shortages.” Readers are invited to send information to ken.simonson@agc.org [ http://ken.simonson@agc.org ] .
Steel-industry newsletter Steel Market Update [ https://www.steelmarketupdate.com/ ] reported today, “Hot-rolled coil prices charged higher yet again even as lead times stretched into August, a typically slower time of the year….Hot-rolled coil prices have hit a new all-time high of $1,675 per ton, up $55 per ton compared to a week ago and up $1,235 per ton from August of last year. Cold-rolled coil prices were up $65 per ton week-over-week, galvanized base prices gained $20 per ton, and Galvalume prices were up $70 per ton. The increases came after June prime scrap prices settled up $60 per gross ton. Plate prices, meanwhile, were unchanged….SMU’s Price Momentum Indicators, in the meantime, continue to point toward higher prices for the next 30 days.”
 
Lumber-product prices have shown mixed trends recently. Futures contracts for lumber have declined sharply for four weeks in a row, while trade publication Random Lengths [ https://randomlengths.com ] reported further record weekly highs for oriented strand board and lumber prices.

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Construction Employment Stalls in April, Materials Costs Rise Again, Inventories Shrink

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The level of construction employment remains virtually unchanged in St. Louis and across the U.S. as commercial and residential contractors contend with a prolonged scarcity of able workers and a still-choked building materials supply chain.

Associated General Contractors of America Chief Economist Ken Simonson says finding enough workers continues to be a feat, as reflected in workforce statistics from April. Augmenting the people shortage, he adds, are problems in getting stable prices and reliable deliveries of key materials.

“Contractors are experiencing unprecedented intensity and range of cost increases, supply-chain disruptions and worker shortages that have kept firms from increase their workforces,” said Simonson. “These challenges will make it difficult for contractors to rebound as the pandemic appears to wane.”

Construction employment in the U.S. during April totaled 7.45 million, matching March’s level but 2.6 percent below the most recent peak in February 2020. Simonson said the number of former construction workers (768,000) who were unemployed in April dropped by half from one year ago, and the sector’s unemployment rate fell from 16.6 percent in April 2020 to 7.7 percent last month.

“The fact that (construction) employment has stalled – despite strong demand for new homes, remodeling of all types and selected categories of nonresidential categories – suggests that contractors can’t get either the materials or the workers they need,” Simonson said, noting that many firms are reporting backlogs and rations of key materials.

Still in short supply, according to the Institute for Supply Management’s latest survey report, are steel and steel products (for five months now), PVC products (a three-month shortage), lumber and circuit breakers.

Price spikes continue relative to copper, wire, oriented strand board, lumber, wood products, resin products, PVC products, steel, diesel, aluminum, vinyl windows and roof shingles.

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Construction employment increased in 43 states, D.C. in 2018; ‘bid price’ PPI rose 5.3%

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FacebooktwitterlinkedinmailSubmitted by the Associated General Contractors Association

Seasonally adjusted construction employment rose year-over-year (y/y) from December 2017 to December 2018 in 43 states and the District of Columbia, declined in six states and was unchanged in Mississippi, an AGC analysis of Bureau of Labor Statistics data released today showed. Texas added the most construction jobs over the year (46,800 jobs, 6.4%), followed by Florida (34,900, 6.7%), California (21,700, 2.6%), Georgia (21,500, 11%) and Arizona (18,900, 13%). Connecticut added the highest percentage of construction jobs in 2018 (17%, 9,700 jobs), followed by Wyoming (15%, 2,900 jobs), Arizona, Nevada (12%, 10,600) and North Dakota (11%, 2,900). Construction employment set a record high in five states:  Nebraska, New York, Oklahoma, Oregon and Texas. South Carolina shed the largest number and percentage of jobs (-5,100 jobs, -5.0%), followed by Hawaii (-1,800, -4.8%) and New Jersey (-2,200, -1.4%). Construction employment increased from November to December in 36 states, decreased in 11 and held steady in Alaska, Idaho, New Hampshire and D.C. (AGC’s rankings are based on seasonally adjusted data, which in D.C., Hawaii and five other states is available only for construction, mining and logging combined.)

The producer price index (PPI) for final demand in December, not seasonally adjusted, decreased 0.3% from November but increased 2.5% y/y from December 2017, the Bureau of Labor Statistics (BLS) reported on Tuesday. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 31% of total construction. The PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of buildings—was unchanged for the month but rose 5.3% y/y, matching the November 2017-November 2018 change as the largest 12-month increase since the series began in June 2009. Increases ranged from 4.1% y/y for warehouses to 4.5% for health care buildings, 5.6% for offices, 5.5% for schools and 5.9% for industrial buildings. Increases in PPIs for subcontractors’ new, repair and maintenance work on nonresidential buildings ranged from 0.6% y/y for roofing contractors to 4.8% for plumbing contractors, 5.0% for electrical contractors and 6.2% for concrete contractors.

The PPI for inputs to construction—excluding capital investment, labor and imports—comprises a mix of goods (56%) and services (44%). This index decreased 0.8% for the month but increased 3.8% y/y, the second-straight month in which the “bid price” PPI increased more than the input cost PPI. Increases for inputs to seven nonresidential structure types were similar, ranging from 3.4% for power and communication structures to 4.6% for highways and streets. PPIs for inputs to new residential structures rose 3.5% y/y for single-family and 3.9% for multifamily. The PPI for services inputs to construction rose 4.4%, compared to a 3.7% increase in 2017. The index for goods inputs (including items consumed by contractors, such as diesel fuel) climbed 3.5%, down from 5.0% in 2017, as the PPI for energy inputs fell 3.9% in 2018 after rising 21% in 2017.

The PPI for goods less food and energy increased 4.8% in 2018, up from 3.3% in 2017. Inputs important to construction that had large one- or 12-month price changes include steel mill products, down 0.9% for the month but up 19% y/y; diesel fuel, -12% and 5.0% asphalt felts and coatings, 1.8% and 11%, respectively; asphalt paving mixtures and blocks, 0 and 10%; architectural coatings, 0.3% and 7.2%; truck transportation of freight, 0.4% and 6.8%; aluminum mill shapes, -0.4% and 63%; insulation materials, -0.5% and 5.1%; diesel fuel, -12% and 5.0%; and copper and brass mill shapes, 1.3% and -5.6%. Readers are invited to send copies of price-change notices to simonsonk@agc.org.

Spending on nonresidential buildings nationally is projected to grow by 4.4% this year, paced by healthy gains in the industrial and institutional building sectors,” American Institute of Architects chief economist Kermit Baker wrote on Wednesday, reporting the consensus of eight forecasts. “For 2020, growth is projected to slow to 2.4%, with essentially no increase in spending on commercial facilities but gains in the 3% range in the industrial and institutional categories. Still, there is growing concern inside and outside of the industry that a broader economic downturn may be materializing over the next 12 to 24 months. Continued healthy gains in construction activity in the near-term is the projection of the [panel. They] see the 2018 growth rate remaining essentially unchanged for this year. However, the composition will change significantly. Last year, spending on commercial facilities increased around 7% while advancing by about half that rate for institutional buildings and declining for the industrial sector. This year, gains in each of the major building sectors are expected to be in the 3-5% range.”

“Economic activity increased in most of the U.S., with eight of 12 Federal Reserve districts reporting modest to moderate growth,” the Federal Reserve reported on Wednesday in the latest “Beige Book,” based on information collected from late November through January 7. The Beige Book is a compilation of informal soundings of business conditions in the 12 Fed districts, which are referenced by the name of their headquarters cities. “New home construction and existing home sales were little changed, with several districts reporting that sales were limited by rising prices and low inventory. Commercial real estate activity was also little changed on balance. All Districts noted that labor markets were tight and that firms were struggling to find workers at any skill level. Minneapolis indicated that construction firms had turned down business because they could not find workers.”AGC compiled all construction-related comments.Facebooktwitterlinkedinmail