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October 8, 2021 - 4:29pm

According to data released today by the US Bureau of Labor Statistics, the national construction industry added 22,000 on net in September.

Key Takeaways

 

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

Nonresidential Construction Employment Rises Slightly in September, Says ABC

WASHINGTON, Oct. 8—The construction industry added 22,000 jobs on net in September, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. Overall, the industry has recovered 912,000 (81.9%) of the jobs lost during earlier stages of the pandemic.

Nonresidential construction employment increased by 18,600 positions on net, with all three subcategories showing gains for the month. Nonresidential specialty trade contractors added 11,400 jobs, while nonresidential building and heavy and civil engineering employment rose by 4,100 and 3,100 positions, respectively.

The construction unemployment rate dropped slightly to 4.5% in September. Unemployment across all industries fell from 5.2% in August to 4.8% last month.

“The economy added fewer than 200,000 jobs in September, well below the consensus forecast of 500,000 new jobs, making it clear that August’s disappointing employment performance was not an aberration,” said ABC Chief Economist Anirban Basu. “Earlier during the summer, the U.S. economy had been adding jobs at a rapid pace. The last few weeks suggest the final stages of labor market recovery will prove extremely challenging.

“Theories abound regarding why employers are struggling to fill available jobs, including fear of infection and vaccination, previously received federal assistance and changed values during the pandemic,” said Basu. “Recent data suggest that many job seekers are actively looking for opportunities to continue to work from home much of the time. Construction generally does not supply many opportunities for telework.

“The ongoing labor shortage puts continued upward pressure on the price of delivering construction services,” said Basu. “Along with input shortages and rising materials prices, this is placing the recovery of nonresidential construction spending at risk. Based on ABC’s Construction Backlog Indicator, a growing chorus of project owners are choosing to delay projects and, in some instances, cancel them altogether. The primary issue is that bids are coming in too high to justify the deployment of capital under many circumstances.

“Despite adding jobs on net in September, construction industry employment remains below March 2021 levels, and recent economic data suggest that some fraction of the confidence contractors have been expressing in recent months is unjustified,” said Basu. “Inflationary pressures are slowing the pace of recovery in nonresidential construction, and with global supply chains in disarray and employers suffering ongoing difficulty filling openings, industry challenges will persist into 2022. At some point, however, the labor market should begin to normalize as people experience growing difficulty paying their bills and global supply chain dynamics eventually improve.”


Press Release from Associated General Contractors of America (AGC)

Nonresidential Construction Sector Posts First Job Gain Since March But Has Yet To Hit Pre-Pandemic Levels Amid Supply Chain Disruptions & Delays

Association Officials Noted that Supply Chain Problems and Materials Price Increases are Impacting Demand for Nonresidential Projects, Prompting Some Owners to Delay or Cancel Projects

The construction industry gained 22,000 jobs between August and September as nonresidential construction firms added employees for the first time in six months, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said nonresidential construction has been affected by the widespread supply chain problems, which are causing owners already uncertain about future demand for commercial space to delay or even cancel some projects.

“While it is refreshing to see job gains in both residential and nonresidential construction, nonresidential building and infrastructure employment remains far below its pre-pandemic peak,” said Ken Simonson, the association’s chief economist. “It will take more than a few months of gains to match the overall economy.”

Construction employment in September totaled 7,447,000, an increase of 22,000 since August. However, industry employment remained 201,000 below the pre-pandemic peak set in February 2020.

The nonresidential segment, comprising nonresidential building and specialty trade contractors plus heavy and civil engineering construction firms, added 18,600 employees in September. But nonresidential employment is 281,000 below the February 2020 level, as the sector has recovered only 56 percent of the jobs lost in the first two months of the pandemic.

Residential construction--including building contractors such as homebuilders, along with residential specialty trades--added 3,600 employees in September. Residential employment tops the February 2020 mark by 80,000.

Simonson cited an unending series of supply-chain bottlenecks, as well as extreme price increases and long lead times for a variety of construction materials, as threats to further growth of nonresidential construction. He said he had heard about an increasing number of project owners deciding to postpone projects because of excessive cost increases and lead times. He noted that the association has again updated its Construction Inflation Alert, a guide to inform owners, officials, and others about the cost and supply-chain challenges.

Association officials urged the Biden administration to remove tariffs and import quotas on a range of key construction materials to help address supply chain disruptions. They added that Congress can help offset declining nonresidential demand for construction by passing the bipartisan infrastructure bill that has already cleared the Senate.

“Both parties in the House should make passing the infrastructure bill a top priority because it is the best way to create new construction careers and make our economy more efficient,” said Stephen E. Sandherr, the association’s chief executive officer. “If the President acts to address supply chain problems and Congress passes the infrastructure bill, construction employment is likely to surge.”

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