Construction job losses hit two-year high
The construction industry lost 15,000 net jobs nationally in May, according to an analysis of Friday’s Bureau of Labor Statistics report by Associated Builders and Contractors (ABC).
The report shows the loss is the industry’s worst since December 2013. April’s estimate had been revised downward from 1,000 net new jobs to a loss of 5,000 net jobs. This is two consecutive months of job loses in construction for the first time in four years, according to the report.
“While the construction industry unemployment rate fell to its lowest level since October 2006, the fact that the unemployment rate has shed 3.5 percentage points in two months while losing 20,000 jobs is indicative of a shrinking labor force. This signals the worsening of the industry-wide skilled labor shortage,” said Anirban Basu, ABC’s chief economist.
This report comes days after a report showing nonresidential construction spending has dropped in April.
“Without question, the U.S. economy is associated with significant weakness. However, there are sources of strength based on other data series, including both the auto and housing sectors. Recent retail sales data have become somewhat more upbeat. These positive influences may be enough to keep the U.S. economy out of recession this year,” Basu said.
“Still, contractors should be on guard,” said Basu. “Many developers believe that the current real estate cycle is now in its seventh inning or later. It is quite likely that job growth will pick up during the months to come, but financial markets will be shaken by today’s report. The weak jobs number will also impact Federal Reserve policy, and what had been a likely interest rate increase in June or July may be off the table for now.”
The construction industry unemployment rate fell to 5.2 percent in May, its lowest level since October 2006. The nonresidential construction sector lost 2,100 jobs in May after adding 4,700 jobs in April (revised down from 6,600 net new jobs). The heavy and civil engineering sector, which shed 8,200 positions in May, accounted for over half of the month’s job losses.
- Nonresidential building employment fell by 5,100 jobs in May but is up by 16,900 jobs or 2.3 percent on a year-over-year basis.
- Residential building construction employment shrank by 1,200 jobs in May but is up by 33,700 jobs or 4.9 percent on a year ago basis.
- Nonresidential specialty trade contractors added 3,000 jobs for the month, and employment in that category is up by 67,500 jobs or 2.9 percent from the same time one year ago.
- Residential specialty trade contractors reduced payrolls by 3,200 in May but have added 94,000 jobs or 5.3 percent since May 2015.
- The heavy and civil engineering construction segment lost 8,200 jobs in May but is up by 7,000 positions or 0.8 percent on a year-over-year basis.