The U.S. construction industry lost 15,000 net jobs in May according to an analysis of the U.S. Bureau of Labor Statistics report by Associated Builders and Contractors (ABC). This represents the industry's worst month since December 2013, when payrolls also shrank by 15,000 jobs. Including April's estimate, which was downwardly revised from 1,000 net new jobs to a loss of 5,000 net jobs, the industry has now lost jobs in two consecutive months for the first time in four years.
"Today's jobs report was earth-shattering," said Anirban Basu, ABC's chief economist. "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.
"Coming just days after a disappointing nonresidential construction spending report, these job losses will undoubtedly spark talk of recession after a hiatus of roughly three months," said Basu. "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.
"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% 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% 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% 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% 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% 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% on a year-over-year basis.