According to data released last week by the US Bureau of Labor Statistics, the national construction industry lost 7,000 jobs on net in June.
Press Release from Associated Builders and Contractors, Inc (ABC)
WASHINGTON, July 2—The construction industry lost 7,000 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. Despite that setback, the industry has recovered 875,000 (78.6%) of the jobs lost during the earlier stages of the pandemic.
Nonresidential construction employment declined by 22,600 positions on net in June, with the majority of losses sustained among nonresidential specialty trade contractors, a segment that lost 14,800 net jobs. Heavy and civil engineering employment fell by 10,900 jobs, while the nonresidential building sector added 3,100 jobs on net.
The construction unemployment rate rose to 7.5% in June. Unemployment across all industries increased slightly from 5.8% in May to 5.9% last month.
“The nonresidential construction industry has received negative economic data for two consecutive days,” said ABC Chief Economist Anirban Basu. “Yesterday, we learned that nonresidential construction spending declined across a broad spectrum of private and public segments in May. Today, we learned that the industry lost jobs in June. None of this is consistent with optimistic projections for industry activity generated by ABC’s Construction Confidence Indicator. Perhaps a turnaround is right around the corner, but it has failed to emerge thus far.
“While many will extol the virtues of the headline jobs number and place substantial focus upon that, as a practical matter, today’s employment report is an utter mess,” said Basu. “That’s really the headline—that the numbers delivered by the government today are, when viewed collectively, nonsensical or at least very difficult to reconcile. According to the government survey of employers, America’s economy added 850,000 jobs last month. That was meaningfully above consensus expectations after two months of disappointing numbers. But a survey of households for precisely the same period indicates that the nation lost 18,000 jobs. The household survey also indicates that the labor force participation rate failed to rise, that the number of unemployed people in America rose by 168,000 and that the official rate of unemployment increased from 5.8% in May to 5.9% in June.
“In other words, today’s data regarding the U.S. labor market supply more questions than answers,” said Basu. “Most economists pay more attention to the establishment survey, which means that most assessments regarding today’s jobs report will be upbeat. Nonetheless, contractors and other economic stakeholders should be concerned by ongoing labor market dysfunctions, including an inordinate level of difficulty finding workers, elevated numbers of people quitting their jobs and rising wages. While wage growth moderated in June, that may be because disproportionate numbers of entry-level workers re-engaged the economy given the lapse of enhanced unemployment benefits in certain states and their imminent cessation elsewhere. The entry of these workers in large numbers would tend to suppress average wage measures. Most contractors are likely continuing to experience substantial upward wage pressure.”
Press Release from Associated General Contractors of America (AGC)
Association Officials Note that Labor and Supply Chain Issues are Leading to Project Delays that May be Undermining Recovering Demand for Nonresidential Construction Projects, Call for Relief Measures
Construction employment declined by 7,000 between May and June as the industry still employs 238,000 fewer people than before the pandemic, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said that job losses in the nonresidential construction sector offset modest monthly gains in residential construction as many firms struggle with worker shortages, supply chain disruptions and rising materials prices.
“It is hard for the industry to expand when it can’t find qualified workers, key building materials are scarce, and the prices for them keep climbing,” said Stephen E. Sandherr, the association’s chief executive officer. “June’s job declines seem less about a lack of demand for projects and a lot more about a lack of supplies to use and workers to employ.”
Construction employment in June totaled 7,410,000, dropping 7,000 from the revised May total. The total in June remained 238,000 or 3.1 percent below February 2020, the high point before the pandemic drove construction employment down. The number of former construction workers who were unemployed in June, 730,000, dropped a quarter from a year ago and the sector’s unemployment rate fell from 10.1 percent in June 2020 to 7.5 percent this June.
Residential and nonresidential construction sectors have differed sharply in their recovery since the pre-pandemic peak in February 2020. Residential construction firms—contractors working on new housing, additions, and remodeling—gained 15,200 employees during the month and have added 51,000 workers or 1.7 percent over 16 months. The nonresidential sector—comprising nonresidential building, specialty trades, and heavy and civil engineering contractors—shed 22,600 jobs in June and employed 289,000 fewer workers or 6.2 percent less than in February 2020.
Sandherr noted that many firms report key materials are backlogged or rationed, while also reporting frequent increases in the amount they pay for those materials. In addition, many firms report they are having a hard time finding workers to hire despite the relatively high number of people currently out of work. He added these factors are contributing to rising costs for many contractors, which are detailed in the association’s updated Construction Inflation Alert.
Association officials said they were taking steps to recruit more people into the construction industry. They noted the association launched its “Construction is Essential” recruiting campaign earlier this year. They said Washington officials could help the industry by taking steps to ease supply chain backups. They also continued to call on the President to remove tariffs on key construction materials, including steel.
“It appears there are large numbers of qualified workers available to hire who are on the sidelines until schools reopen and the federal unemployment supplements expire,” said Stephen E. Sandherr, the association’s chief executive officer. “Our message to these workers is clear, there are high-paying construction careers available when they are ready.”