Spokane Journal of Business

Jobs, work rallied late, AGC says

Construction employment grew; activity hit 17-month high in last months of '11

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Construction employment increased in December by 17,000 workers, driven by gains in nonresidential construction employment, says an analysis of federal employment data released earlier this month by the Associated General Contractors of America.

Association officials say construction employment likely benefited from unseasonably warm weather across much of the U.S. that extended the construction season.

"Nonresidential construction is clearly driving last month's employment gains," says Ken Simonson, the association's chief economist. "But it is too early to tell whether those gains came because the weather was good enough for crews to keep working well into December or because demand is truly rebounding."

Total construction employment now stands at about 5.5 million, or 0.3 percent higher than a month earlier, and 46,000, or 0.8 percent, higher than in December 2010, the economist says.

He adds that the latest employment figures continue a months-long trend of slight gains followed by slight declines in construction employment and that overall construction employment is still far below its peak level of about 7.7 million in April 2006.

The nonresidential construction sector added 17,200 construction jobs in December, Simonson says. He says nonresidential specialty trade contractors added 20,200 positions, while heavy and civil engineering construction firms, which perform the majority of publicly-funded construction work, shed 300 jobs. Nonresidential building contractors shed 2,700 jobs in December. Residential construction lost 400 total jobs, as the residential specialty trade contractors shed 2,900 jobs, and residential builders added only 2,500 positions.

The employment news comes on the heels of a separate AGC report that says construction spending totaled $807 billion in November 2011, the highest level since June 2010.

Homebuilding, private nonresidential construction, and public construction all increased compared with October, the organization reported earlier this month in an analysis of new Census Bureau data.

Association officials caution, however, that public spending will drop even further in 2012 because of delays in enacting needed infrastructure bills and planned cuts to many federal construction programs.

"Several segments of construction appear to be climbing out of a hole," Simonson says. "The new year should reinforce recent year-over-year gains in apartment, power, manufacturing, and private transportation construction. But November's upturns in single-family homebuilding and public construction may not be sustainable."

Simonson says total construction spending rose 1.2 percent in November from October and 0.5 percent from the November 2010 level. Private residential construction posted increases of 2 percent and 3.4 percent, with gains in single-family, multifamily, and residential improvements. Private nonresidential construction spending inched up a negligible amount from October but gained 4.5 percent compared with November 2010. Public spending rose 1.7 percent last month but still was down 5.3 percent from a year earlier.

Simonson adds that the uptick in private nonresidential construction from November 2010 was widespread, led by manufacturing, up 12.6 percent; commercial (retail, warehouse, and farm), up 12 percent; private educational, up 10 percent; private transportation, up 9.2 percent; and power (including oil and gas), up 8.4 percent.

Most public construction categories shrank during the past 12 months, although the two largest had mixed results, Simonson says. Highway spending increased for the sixth straight month, by 1.9 percent, but was 2.2 percent below the November 2010 mark. Public educational construction was up 0.5 percent for the month and 2.8 percent from a year earlier.

"Public construction segments face stiff spending cuts in 2012," Simonson says.

Association leaders say planned cuts to a range of federal building and infrastructure construction programs are likely to hurt the construction industry even as private sector demand finally rebounds.

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