“Today’s employment report confirms what many economists believe — the July jobs report was an anomaly and the U.S. economy remains stable,” said ABC Chief Economist Anirban Basu. “While the economy added an impressive 201,000 net new jobs in August, the real story is wage growth — average hourly wages are now at their highest level since June 2009. Economists and others have been warning about mounting wage pressures for quite some time, and today’s report supplies additional information indicating that such concerns are warranted.

“Given the ongoing momentum of the U.S. labor market, elevated levels of consumer and business confidence and the impacts of tax reform, construction firms can expect plentiful bidding opportunities during the months ahead,” Basu continued. “Presently, there are very few indications of economic stagnation, with financial markets continuing to signal solid corporate performance during the quarters ahead.

“That said, in economics, no set of circumstances can be viewed as purely positive. Skilled labor shortages will continue to worsen, driving compensation costs higher,” added Basu. “This, along with rising materials prices, will tend to drive construction costs higher, which may eventually undermine the volume of construction starts. Moreover, borrowing costs will continue to rise as the economy expands along with wages. This will place additional pressures on developers and others who endeavor to move forward with construction projects. For now, such concerns are secondary to the current robust economic momentum.”

Publication date: 9/10/2018

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