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Submitted by cdp-inc on August 10, 2020 - 9:43am

According to data released Friday by the US Bureau of Labor Statistics, the national construction industry added 20,000 jobs on net in July.

Key Takeaways

Press Release from Associated Builders and Contractors, Inc (ABC)

Nonresidential Construction Employment Falls in July Due to Project Cancellations and Postponements, Says ABC

WASHINGTON, Aug. 7—The construction industry added 20,000 jobs on net in July, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. During the last three months, the industry has added 639,000 jobs, recovering roughly 59% of the jobs lost since the start of the pandemic-induced recession.

Nonresidential construction employment, however, was down by 4,000 jobs on net in July compared to June. The bulk of job loss emerged from the nonresidential building subsector, which experienced a decrease of 9,300 jobs. Nonresidential specialty trade contractors added 3,500 jobs, while the heavy and civil engineering segment added 1,800 jobs.

The construction unemployment rate was 8.9% in July, up 5.1 percentage points from the same time last year. Unemployment across all industries declined from 11.1% in June to 10.2% this month.

“For several weeks, contractors have noted an increase in project postponements and cancellations due to coronavirus impacts,” said ABC Chief Economist Anirban Basu. “July data reflect this reality, as many of the postponed or cancelled projects are in categories such as office, lodging and retail. Correspondingly, employment in the nonresidential building segments declined by more than 9,000 positions in July.”

“At the same time, there appears to be a growing amount of work modifying existing structures,” said Basu. “That helps explain the 3,500 jobs created within the nonresidential specialty trade segment, which, among other things, encompasses workers who handle air handling systems.

“The outlook for nonresidential construction spending is not especially favorable for the next year,” said Basu. “The pandemic remains stubbornly in place, and while today’s jobs numbers indicate ongoing economic recovery, the pace of recovery has softened in conjunction with viral resurgence. Commercial real estate fundamentals are in tatters, with the pandemic set to leave behind many shuttered restaurants, empty storefronts and vacated office suites. State and local government finances are also in dire shape, while the federal government’s Highway Trust Fund is on the verge of insolvency absent any congressional intervention. While contractors maintain a healthy level of backlog, according to ABC’s Construction Backlog Indicator, the trajectory of nonresidential construction during the months ahead will depend heavily upon the nature of economic stimulus and the extent policymakers prioritize construction and infrastructure.”

Press Release from Associated General Contractors of America (AGC)

Construction Industry Adds 20,000 Employees In July But Nonresidential Employment Dips; Association Warns Skid Will Worsen Without New Relief

Gains in July are Limited to Residential Side as State and Local Governments and Private Owners Postpone And Cancel Upcoming Projects; Association Urges Prompt Federal Action to Make up for Revenue Losses

Construction employment increased by 20,000 jobs in July but the gains were limited to housing, while employment related to infrastructure and nonresidential building construction slipped by 4,000, according to an analysis by the Associated General Contractors of America of government data released today. Association officials cautioned that non-housing construction job losses will continue unless the federal government provides infrastructure funding for state and local budgets, enacts liability reforms and other relief measures.

“It is gratifying that the construction industry continued to add jobs in July, but last month’s gains were entirely in residential building and specialty trades,” said Ken Simonson, the association’s chief economist. “It is likely that many nonresidential jobs are in jeopardy following the completion of emergency projects and ones begun before the pandemic. Projects that had been scheduled to start this summer or later are being canceled by both public agencies and private owners, while few new facilities are breaking ground.”

The employment pickup in July follow gains of 163,000 jobs in June and 456,000 in May, the economist noted. Nevertheless, construction employment in July remained 444,000 jobs or 5.6 percent below the recent peak in February.

Residential building and specialty trade construction firms—firms that concentrate on residential new construction, additions and renovations—accounted for 24,000 additional jobs in July. In contrast, employment among nonresidential segments declined by 4,000 jobs.

Compared to the most recent peak in February, employment in the heavy and civil engineering construction segment of the industry, representing firms that work mainly on highways and other infrastructure—was 7.4 percent below the February total. Employment at nonresidential building and specialty trade construction firms was 6.8 percent less than in February. Employment at residential building and specialty trade construction firms combined slipped by a more modest 4.1 percent.

The industry’s unemployment rate in July was 8.9 percent, with 870,000 former construction workers idled. These figures were more than double the July 2019 figures and were the highest July totals since 2013 and 2012, respectively.

Association officials said the best way to avoid the expected future construction job losses is for federal officials to quickly enact and implement funding for infrastructure, pass needed liability reforms and other pro-growth recovery measures. They said that investing in infrastructure will add to employment in many manufacturing, trucking and other sectors and will create assets that improve productivity, safety and well-being for all.

“It is vital for officials of both parties, both sides of Capitol Hill, and the Administration to come to agreement promptly on meaningful increases in infrastructure funding and other recovery measures,” said Stephen E. Sandherr, the association’s chief executive officer. “Without quick action, the nonresidential job losses that began in July will be quickly worsen and the nation will lose a golden opportunity to start on improving infrastructure at a time of high labor availability and low materials and borrowing costs.”