ABC provides updates on construction employment, unemployment; nonresidential spending

By |  February 8, 2024

Photo:

The construction industry added 11,000 jobs in January, according to an Associated Builders & Contractors (ABC) analysis of U.S. Bureau of Labor Statistics data.

On a year-over-year basis, industry employment has expanded by 216,000 jobs, an increase of 2.7 percent.

Nonresidential construction employment increased by 7,600 positions, with growth in two of three subcategories. Nonresidential specialty trade added 13,700 positions, while nonresidential building added 1,600 jobs. Heavy and civil engineering lost 7,700 jobs.

The construction unemployment rate rose to 6.9 percent in January – the third lowest January rate on record, according to Anirban Basu, ABC’s chief economist. Unemployment across all industries remained unchanged at 3.7 percent last month.

“The construction industry added jobs for the 10th straight month in January,” Basu says. “That was hardly the biggest story from [the] release, however, with total U.S. payroll employment increasing by a staggering 353,000 positions. That’s nearly twice the consensus forecast and represents yet another economic indicator that has surprised to the upside.

“As a result of labor scarcity, construction wages surged in January, increasing at the fastest rate since July 2023,” he adds. “With both the construction industry and the broader economy continuing to grow at a rapid pace, contractors will struggle to remain adequately staffed over the coming quarters, especially with a majority of contractors intending to increase their staffing levels over the next six months, according to ABC’s Construction Confidence Index.”

The Associated General Contractors of America and Sage Policy Group teamed to release their annual survey titled: “High Hopes for Public Funding Amid Workforce & Supply Chain Challenges.” Photo: Sundry Photography/ iStock / Getty Images Plus/Getty Images

Construction employment grew 2.7 percent in January 2024 compared to a year earlier, while not seasonally adjusted national construction unemployment remained unchanged from December 2022 to December 2023, according to the Associated Builders & Contractors. Photo: Sundry Photography/ iStock / Getty Images Plus/Getty Images

Unemployment rates

The not seasonally adjusted (NSA) national construction unemployment rate at 4.4 percent was unchanged in December 2023 from the previous year, according to a state-by-state analysis of U.S. Bureau of Labor Statistics data released ABC.

The analysis also found that 25 states had lower unemployment rates over the same period, four were unchanged and 21 states were higher. Starting in February 2022 through December 2023, seasonally adjusted construction employment exceeded its pre-pandemic peak of 7.6 million.

In December 2023, 31 states had lower construction unemployment rates compared to December 2019, three states’ rates (Missouri, Oklahoma and Oregon) were unchanged and 16 states had higher rates.

“Continued high interest rates have been a drag on plans for new construction,” says Bernard Markstein, president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “However, industry employment remains healthy, as builders work on their backlog of projects and employers fill some of their advertised positions. Nonresidential construction activity and employment is benefiting from federal funding and tax incentives for manufacturers, as well as funding for state and local infrastructure projects.”

National and state unemployment rates are best evaluated on a year-over-year basis, according to ABC, because these industry-specific rates are not seasonally adjusted. However, due to the shifting effects on the economy from high interest rates, energy price fluctuations and other national and international developments, month-to-month comparisons offer insight into the variable economic environment impact from these factors on construction employment, the association says.

In December 2023, 32 states had lower estimated construction unemployment rates than in November, 17 states had higher rates and one (Maryland) had the same rate.

The five states with the lowest estimated NSA construction unemployment rates for December 2023 were Maryland (0.5 percent), Georgia (1.7 percent), Utah (1.9 percent) and Delaware and Tennessee (2.1 percent each).

Maryland and Georgia each posted their lowest December NSA estimated construction unemployment rate on record, according to ABC. Utah had its second lowest December rate, behind last year’s 1.8 percent. Delaware and Tennessee both came in with their lowest December rate on record for the second time – Delaware matching its December 2018 rate and Tennessee its 2022 rate. Delaware’s unemployment rate covers construction, mining and logging.

The five states with the highest December 2023 estimated NSA construction unemployment rates were Vermont (7.3 percent), Illinois (7.5 percent), Alaska (9.4 percent), Connecticut (10.5 percent) and Rhode Island (11.3 percent).

Alaska posted its lowest December NSA estimated construction unemployment rate on record and had the largest monthly decline in its rate (down 4.8 percent), according to ABC. Vermont had the third largest year-over-year drop in its unemployment rate, down 2.6 percent, behind South Dakota (down 3.4 percent) and Minnesota (down 2.8 percent).

Nonresidential construction spending

National nonresidential construction spending increased 0.4 percent in December, according to an ABC analysis of U.S. Census Bureau data.

On a seasonally adjusted annualized basis, nonresidential spending totaled $1.174 trillion.

Spending was down on a monthly basis in eight of the 16 nonresidential subcategories. Private nonresidential spending was down 0.2 percent in December, while public nonresidential construction spending was up 1.4 percent.

“Nonresidential construction spending finished 2023 up more than 20 percent – the 19th consecutive monthly increase – and will carry ample momentum in 2024,” Basu says. “While much of that strength is due to surging investment in new manufacturing structures, roughly half of the 16 nonresidential subsegments saw spending increases by 20 percent or more in 2023.”

He adds that despite that success, privately financed nonresidential activity declined 0.2 percent in December 2023.

Says Basu: “That decrease in private activity was offset by surging activity in the highway and street category, which along with other publicly financed segments will retain momentum in the coming months as infrastructure investments are finally put in place.”

Related: ABC: Construction input prices decrease in December

Jack Kopanski

About the Author:

Jack Kopanski is the Managing Editor of Pit & Quarry and Editor-in-Chief of Portable Plants. Kopanski can be reached at 216-706-3756 or jkopanski@northcoastmedia.net.

Comments are closed