Source: AGC, 11.05.2010

Temporary Public-Sector Construction Spending Boosts Commercial Construction Employment, Offsetting Declines in Residential Construction, Association Officials Note

Even as the number of people working in construction increased by 5,000 between September and October 2010, the industry’s unemployment rate rose to 17.3 percent, according to an analysis of federal employment figures released today by the Associated General Contractors of America. Temporary government investments boosted commercial construction employment, offsetting further job losses in residential construction, association officials noted.

“Despite significant help from programs like the BRAC and the stimulus, construction employment continues to lag behind much of the private sector,” said Stephen E. Sandherr, the association’s chief executive officer. “It is yet another indicator that the economy has a long way to grow before demand for new office buildings, retail centers and manufacturing facilities returns.”

Association officials noted that construction employment lagged behind other sectors of the economy. For example, while total private employment rose by 1.1 million during the past 12 months, the construction industry lost 122,000 jobs. Meanwhile, the industry’s unemployment rate is nearly double the unadjusted national rate of nine percent.

Nonresidential construction fared relatively well in October compared to residential construction, association officials said. Nonresidential construction employment added 10,300 jobs since September, while residential construction lost 5,800 jobs. Nonresidential specialty construction added 7,300 jobs and heavy & civil engineering added 4,800 jobs. However, nonresidential building construction employment declined by 1,800 jobs between September and October.

The employment data is consistent with construction spending figures released earlier this week that showed increases in public construction spending offsetting continued declines in private-sector construction. Temporary federal programs like the stimulus and base realignment efforts were driving demand for construction workers from the specialty trades and heavy & civil engineering construction sectors. Meanwhile decreased private-sector activity contributed to the nonresidential building job losses.

While the stimulus has helped protect the construction industry from more severe job losses, construction firms were unlikely to significantly expand payrolls until the long-term market outlook improves, association officials said. They urged Washington officials to act on long-delayed water and transportation infrastructure programs and to provide the tax and regulatory relief needed to boost private sector economic activity.

“These modest job gains are likely to be as temporary as the programs that are driving them,” said Sandherr. “What this industry needs now is the certainty that comes with consistent tax, regulatory and federal infrastructure policies and the opportunity that comes from sustained and robust private sector economic growth.”