Employment Report Reflects Construction Split in Jobs

July 17, 2006
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WASHINGTON - "A tepid construction job report in June reflected the mix of a hot nonresidential construction job market with a fast-cooling residential scene," said Ken Simonson, chief economist for the Associated General Contractors of America (AGC). Simonson was commenting on a July 7 report from the Bureau of Labor Statistics that showed overall construction employment was essentially unchanged for the fourth straight month, at a seasonally adjusted total of 7.5 million.

"The seemingly stagnant job pool results from cross-cutting currents," Simonson commented. "Residential building and specialty trade construction employment fell by 25,000 since February, including a drop of 9,000 jobs just in June."

Nonresidential building, which has recently experienced a spike, has added 44,000 workers over the past four months, including 9,000 in June. It has been reported that nonresidential builders want to hire more workers, but they are struggling to find qualified applicants.

"The fifth subcategory of construction employment, heavy and civil engineering construction, slipped by 8,000 jobs since February," noted Simonson. "The residential building and heavy construction figures have been somewhat distorted by ‘front-loading' that occurred in January, when record warm and dry weather allowed hiring for outdoor work such as excavation and concrete-pouring to be accelerated by several months.

"To get beyond this distortion, it is useful to look at June-to-June comparisons, which show overall construction employment has expanded."

In spite of the expansion, construction employment continues to shift. "Sectors such as manufacturing, energy and mining, and hospitals are adding jobs and facilities, activity that generates nonresidential construction jobs. Meanwhile, single-family and condominium construction are slowing, and employment in these sectors will drop faster once the backlog of current projects is finished," he said.

Other areas of construction are also experiencing a shift in demand and supply prices. Spot shortages are beginning to surface, especially in the highway construction market, currently considered to be vulnerable.

"Asphalt prices have risen 48 percent in the past 12 months, with spot shortages reported," warned Simonson. "Ready-mixed concrete and diesel fuel prices also are up sharply, so highway budgets don't cover as much paving as before. At the same time, cutbacks in driving due to high gasoline prices means motorists are buying fewer gallons of gas, which reduces the revenues flowing into state highway trust funds."

Publication date: 07/17/2006

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