It doesn’t seem to add up: The number of people working in the construction industry increased by 5,000 between September and October 2010, but the industry’s unemployment rate rose to 17.3 percent, according to a mixed-bag analysis of federal employment figures released by the Associated General Contractors of America (AGC).

Temporary government investments boosted employment in the commercial construction sector, and association officials said this helped offset job losses in residential construction. However, despite help from programs like the stimulus package, construction employment continues to lag behind much of the private sector, said Stephen E. Sandherr, AGC’s chief executive officer.

ROOM TO IMPROVE

“It is yet another indicator that the economy has a long way to grow before the demand for new office buildings, retail centers, and manufacturing facilities returns,” Sandherr said.

Construction employment lagged behind other sectors of the economy. Total private employment rose by 1.1 million during the past 12 months, but the construction industry lost 122,000 jobs. Moreover, the construction’s unemployment rate is nearly double the unadjusted national rate of 9.5 percent. Residential construction did still worse in October, association officials said. Nonresidential construction employment added 10,300 jobs since September, while residential construction lost 5,800 jobs. However, nonresidential specialty construction added 7,300 jobs.

“There’s some good and probably too much bad news” for mechanical contractors, said Brian Turmail, AGC’s executive director of public affairs. Temporary federal investments have been used for projects like road construction, he said. “What’s not happening is any broad construction in the private sector.”

GREEN GRACE

A glut of empty building space is causing some of the drop in new commercial construction. Another bright spot, however, has been the continued interest in greening and energy reduction. “Member firms said that if it weren’t for green construction, they would not be around,” Turmail said. “The savvy owners know they can get a good deal now, and there is a certain cachet to green buildings right now,” Turmail said. “The big question is, who’s got the cash to do it?”

The stimulus has helped protect the construction industry from more severe job losses, AGC said, but construction firms are unlikely to significantly expand their payrolls until the long-term market outlook improves. The association urged Washington officials to provide the tax and regulatory relief needed to boost the private sector’s economic activity.

“What this industry needs is the certainty that comes with consistent tax, regulatory, and federal infrastructure policies, and the opportunity that comes from sustained and robust private sector economic growth,” said Sandherr.

For more information, visit www.agc.org.

Publication date: 11/29/2010