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Submitted by cdp-inc on July 8, 2020 - 1:13pm

According to data released Friday by the US Bureau of Labor Statistics, the national construction industry added 158,000 jobs on net in June.

Key Takeaways

Press Release from Associated Builders and Contractors, Inc (ABC)

Nonresidential Construction Has Recovered 56% of Jobs Lost Since March Employment Report, Says ABC

WASHINGTON, July 2—The construction industry added 158,000 jobs on net in June, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. During the last two months, the industry has added 591,000 jobs, recovering 56% of the industrywide jobs lost since the start of the pandemic.

Nonresidential construction employment added 74,700 jobs on net in June. There was positive job growth in two of the three nonresidential segments, with the largest increase in nonresidential specialty trade contractors, which added 71,300 jobs. Employment in the nonresidential building segment increased by 13,100 jobs, while heavy and civil engineering lost 9,700 jobs.

The construction unemployment rate was 10.1% in June, up 6.1 percentage points from the same time last year but down from 12.7% in May and 16.6% in April. Unemployment across all industries dropped from 13.3% in May to 11.1% in June.

“Since the pandemic devastated the economy, most economists have been predicting a V-shaped recovery,” said ABC Chief Economist Anirban Basu. “To date, this has proven correct. While recovery is likely to become more erratic during the months ahead due to a number of factors, including the reemergence of rapid COVID-19 spread, recent employment, unemployment, residential building permits and retail sales data all highlight the potential of the U.S. economy to experience a rapid rebound in economic activity as 2021 approaches. ABC’s Construction Backlog Indicator rose to 7.9 months in May, an increase of less than 0.1 months from April’s reading, and its Construction Confidence Indicator continued to rebound from the historically low levels observed in the March survey.

“However, even if the broader U.S. economy continues to rebound in 2020, construction is less likely to experience a smooth recovery,” said Basu. “The recession, while brief, wreaked havoc on the economic fundamentals of a number of key segments of the construction market, including office, retail and hotel construction. Moreover, state and local government finances have become increasingly fragile, putting both operational and capital spending at risk.

“After this initial period of recovery in U.S. nonresidential construction, there are likely to be periods of slower growth or even contraction,” said Basu. “Nonresidential construction activity tends to lag the broader economy by 12-18 months, and this suggests that there will be some shaky industry performance in 2021 and perhaps beyond.”

Press Release from Associated General Contractors of America (AGC)

Construction Industry Adds 158,000 Workers In June But Infrastructure Jobs Decline; Association Warns Losses Will Rise Without New Funding

Gains in June are Concentrated in Homebuilding as State and Local Governments Postpone or Cancel Roads and Other Projects in Face of Looming Budget Deficits; Association Urges Prompt Federal Action

Construction employment increased by 158,000 jobs in June, but employment related to infrastructure slipped, according to an analysis by the Associated General Contractors of America of government data released today. Association officials cautioned that additional infrastructure-building job losses are inevitable unless the federal government replenishes depleted state and local budgets for roads and other public works.

“The gain in construction employment in June was concentrated in homebuilding, with scattered increases in nonresidential building, while heavy and civil engineering construction employment—the category that includes many highway and other infrastructure workers—shrank by nearly 10,000 jobs,” said Ken Simonson, the association’s chief economist. “Unfortunately, those infrastructure-related jobs are likely to keep declining as state and local governments postpone or cancel projects in order to cover the huge budget deficits they are facing in the fiscal year that began for many agencies on July 1.”

Simonson noted that the association’s latest survey, conducted June 9-17, found that almost one out of three contractors reported a project that was scheduled to start in June or later had been canceled. He added only one-fifth of firms reported winning new or expanded projects, a share that had held steady since April.

Despite adding 158,000 jobs in June and 453,000 jobs in May, construction employment in June remained 330,000 jobs or 4.4 percent below the June 2019 level. The heavy and civil engineering construction segment of the industry lost 9,700 jobs in June and 60,100 jobs (-5.6 percent) over the year. Nonresidential building construction employment increased by 13,100 for the month but declined by 47,000 jobs (-5.5 percent) over 12 months. Employment among nonresidential specialty trade contractors rose by 71, 300 in June but decreased by 140,000 (-5.2 percent) from a year earlier.

Job losses were milder in the residential side of construction. Residential building firms added 19,100 employees in June but lost 21,000 positions (-2.6 percent) over 12 months. Residential specialty trade contractors added 64,100 employees last month but lost 63,000 workers (-3.0 percent) over the year.

The industry’s unemployment rate in June was 10.1 percent, with 962,000 former construction workers idled. These figures were two and one-half times as high as in June 2019 and were the highest June levels since 2012.

Association officials said the best way to avoid the expected future construction job losses is for federal officials to quickly enact and implement funding for infrastructure, including highway, bridges, waterways and airports. They noted that the Moving Forward Act passed by the U.S. House of Representatives on Wednesday was a first step in that direction but that a more bipartisan approach is needed for funding to become law.

“We urge officials of both parties, both sides of Capitol Hill, and the Administration to come together promptly on meaningful increases in infrastructure funding,” said Stephen E. Sandherr, the association’s chief executive officer. “Without quick action, the job gains of the past two months will be lost, along with the opportunity to start on improving the nation’s infrastructure at a time when labor availability is high and materials and borrowing costs are low.”