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By Bassem Hamdy
February 6, 2017
As of Monday, February 6 our national Construction Health Indicator score is 82.9.
The strongest contributor is Investments 92.
The national Labor score 82.
The national Commodities & Materials Indicator is 74.
A spike of 36,000 net new jobs this January highlight this week’s construction health update. According to the Bureau of Labor Statistics, this 0.5% increase represents the best month for construction employment growth since March of 2016.
Currently the industry employs a total of 6,809,000 people, which is a 2.6 percent — increase from January 2016. Of this number the residential sector added 20,300 positions, while the nonresidential sector – including the heavy civil and engineering sectors – added 14,900 jobs.
Meanwhile, the energy-efficiency construction sector is receiving high praise from green building advocates, with five percent growth in 2016 by adding 300,000 net jobs. According to Dodge Data & Analytics' World Green Building Trends 2016 report, green building is doubling every three years thanks to demand from home buyers.
This is all cause for celebration, but average hourly earnings are humbling and a reminder that the industry is still in the midst of a labor shortage. Between January 2015 and January 2016, earnings in construction notched up 3.2% to $28.52 an hour.
By the numbers the average construction employee worked an average of 38.8 hours per week to earn $1097.28. Wage growth for construction workers now hover around 10% higher than the overall private sector average.
Jobs in construction in Alaska recorded the highest weekly earnings, with $1,343 earned weekly on average as of December 2016. With a 3.3% increase since last month, Arizona exhibited the largest increases in average weekly earnings.
These jobs growth numbers paint a skewed picture of the industry’s opportunities by region. According to the Associated General Contractors of America, employment declined in 110 out of 358 U.S. cities between December 2015 and December 2016.
The California Region recorded the largest gain in the number of private construction companies during the quarter ending in June 2016, with the number of establishments growing 2.8% since the quarter prior. Meanwhile, construction in Boise, Idaho saw the largest job growth in nation, up 19 percent by adding 3,600 jobs.
Cities that witnessed the largest job losses from December 2015 to December 2016 were in the areas near Houston, Texas (-11,200 jobs, -5 percent), Orange, New York (-5,500 jobs, -12 percent); Long Beach, Calif. (-5,200 jobs, -4 percent). The largest percentage declines for the past year were in Kankakee, Ill. (-15 percent, -200 jobs); Casper, Wyo. (-13 percent, -400 jobs) and Wichita, Kansas (-13 percent, -2,100 jobs).
In a survey that the association released in January, 73 percent of the 1,281 participating contractors said they planned to add to their headcount in 2017. But an equally high percentage said they were having trouble filling hourly or salaried positions. End-of-month openings in construction have been at 17-year highs, according to recent government data, Simonson added.
Despite marked employment growth, the industry’s unemployment rate shot up to 9.4% in January. And although more people have started looking for work in the industry, the reasons they are doing so – wage growth and promises of infrastructure investments – may not last forever.
A January survey released by the AGC noted that nearly three-quarters of the 1,281 participating contractors said they hoped to increase their employment in the coming year — but an equal number expressed trouble filling both hourly and salaried positions. And with end-of-month construction openings at a 17-year high, a lack of workers continues to put a strain on the industry.
All data points to continued growth in construction activity and an eagerness by contractors to hire. As a result construction organizations are finally starting to push for lawmakers to fund employment and training programs to equip students and workers with the skills needed to become productive construction employees. Some are even suggesting marketing efforts, immigration reform and a wide coalition effort.
While the labor shortage will continue to squeeze the industry, Dodge Data & Analytics has predicted a 5% increase in starts for 2017, totaling $712.9 billion for the industry, and other industry observers remain cautiously optimistic about the year’s prospects for construction growth.
“Today’s employment report indicated growing strength in construction along a variety of dimensions,” said ABC chief economist Anirban Basu.
“First of all, there was job growth in both residential and nonresidential categories. Over the past year, nonresidential construction has accounted for roughly a quarter of total construction job creation. However, in January, nonresidential activities accounted for more than 40% of net new jobs, indicating relatively faster performance improvement in that part of the nation’s construction sector. Secondly, the industry’s unemployment rate surged in January to 9.4%. More people have begun to look for work in the construction industry, perhaps in part because of indications from the new administration in Washington D.C. that an infrastructure-led stimulus package is now in the works.
“The rapid pace of hiring is consistent with ABC’s backlog survey, which indicates that the typical nonresidential construction firm can look forward to many more months of activity,” said Basu. “With continued aggressive investment in commercial properties and still-low interest rates, backlog will continue to expand among many contractors.
“For contractors, this is likely to mean even more difficulty in finding suitable workers to complete projects,” said Basu. “While the industry unemployment rate has been rising, there is no assurance that new entrants into the U.S. labor force possess the skills necessary to work on today’s construction projects. This also likely implicates faster wage growth within the nation’s construction workforce.”
That’s all we have for now. Keep building and we’ll keep crunching the numbers. Check back here daily as numbers refresh and we’ll continue to translate this into meaningful digests that will help you make informed decisions all week long.
Click here for recaps from Construction Health Updates from past weeks.
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