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Wed December 08 2021

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US construction jobs rise but spending falls

4 Aug 14 US construction is experiencing an uneven recovery, with new government data showing that the sector added 22,000 jobs in July while spending retreated in June.

Analyis of the data by the Associated General Contractors of America found that residential spending and employment surged but officials warned that shrinking public investment threatens to hold down non-residential job gains.

Association officials said that uncertainty about federal funding for a range of infrastructure and construction programs is one reason for the uneven recovery.

"Construction employment and spending are both rising at a moderate year-over-year clip, but there have been some setbacks," said Ken Simonson, the association's chief economist. "While prospects for private construction remain largely favourable, inadequate public investment still threatens to keep too many workers idle."

Construction employment totaled 6,041,000 in July, the highest total since May 2009, while the industry's unemployment rate of 7.5% was the lowest July number in seven years, Simonson noted. The sector’s employment rose by 211,000, or 3.6%, from a year earlier. Residential construction employers added 13,000 jobs in July and 115,600 (5.3%) over 12 months. Non-residential construction employment increased by 9,100 for the month and 95,700 (2.6%) since July 2013. Simonson attributed the weaker growth in non-residential employment to a decline in public construction spending.

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"While the preliminary spending numbers for June show all segments of construction retreated from May levels, looking at the first six months of 2014 as a whole in comparison with the same period a year ago provides a more credible picture of construction trends than does a single-month snapshot," Simonson said. "For the first half of 2014, private spending climbed at double-digit rates, while public construction shrank. I expect both patterns to continue."

Construction spending in June totaled US$950bn (£565bn) at a seasonally adjusted annual rate, down 1.8% from the upwardly revised May total, Simonson noted. Spending for the first half of 2014 as a whole increased 7.8% from the same period in 2013. Private non-residential spending fell 1.6% in June but increased 12.6% for the year to date, while private residential spending slipped 0.3% for the month but rose 10.3% for the year to date. Public construction spending slumped 4.0% from May to June.

Association officials said a newly passed measure to keep federal highway and bridge funding at current levels through to next spring will help, but the temporary fix will do little to clear uncertainty about future federal surface transportation investments beyond next May. They urged Congress to pass a long-term surface transportation bill that includes new sources of revenue needed to avoid future funding shortfalls. They also urged Congress to enact measures to fund a range of other federal infrastructure and construction programmes so contractors can make hiring and purchasing plans for next year.

"As welcome as the temporary highway funding measure is, it does nothing to address the revenue challenges that keep putting federal transportation funding levels at risk," said Stephen Sandherr, the association's chief executive officer. "This is just another instance where Congressional delays are making it hard for employers to figure out how many people they should hire or how much equipment they should buy."

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