Construction Jobs Decline for the First Time in Over Two Years

According to an analysis by the Associated Builders and Contractors (ABC) of U.S. Bureau of Labor Statistics data, the construction industry lost 31,000 net new jobs in February. Overall, nonresidential employment decreased by 20,400 net new positions compared to January, with losses split between nonresidential building (-3,000), heavy and civil engineering (-13,200) and nonresidential specialty contractors (-4,200). However, industry employment is up 223,000 jobs since February 2018, an increase of 3.1%.

ABC analysts attributed much of the decline to weather. “As each major nonresidential construction segment experienced reduced employment in February, there seems little doubt that winter weather helped to shape the February employment data,” said ABC Chief Economist Anirban Basu. “Heavy and civil engineering, which includes road building, is especially susceptible to poor weather conditions, and this segment saw the largest job losses.”

“While it’s likely that there were additional factors shaping today’s jobs numbers, such as side effects from the federal shutdown, there has been growing evidence of weaker global economic growth for months. A number of leading economic indicators have been suggesting that economic growth is set to slow,” Basu said. “The implication is that one cannot simply ignore today’s jobs report as pure aberration. While it is likely that future months will be associated with better job growth numbers than today’s 20,000 jobs headline, U.S. economic growth appears to be generally softer in 2019 than it was in 2018. Today’s data also indicate lower construction unemployment and faster economy-wide wage growth, which all things being equal stand to negatively impact construction firm profitability. While recession is not immediately imminent, today’s jobs report should be considered a reminder that economic circumstances can change quickly, which means that contractors are advised to continue to manage cash flow carefully.”

The Association of General Contractors of America (AGC), meanwhile, pointed out that construction employment grew in 76% of the nation’s metro areas between January 2018 and January 2019 (275 out of 358), declined in 39 (11%) and was unchanged in 44, according to its analysis of federal employment data. Association officials said demand for construction in most parts of the country appears to be outstripping the supply of qualified workers to hire.

"While construction hiring remained very widespread through January, industry employment gains nationally slowed in February—possibly an indication that the pool of qualified workers has dried up in many markets," said Ken Simonson, the association's chief economist. "It will be hard to match this level of employment gains when the unemployment rate is setting new lows in much of the nation and job openings in construction are at all-time highs."

The Phoenix-Mesa-Scottsdale, Ariz. metro area added the most construction jobs during the past year, followed by Atlanta-Sandy Springs-Roswell, Ga., and Houston-The Woodlands-Sugar Land, Texas, while the largest job losses came in San Jose-Sunnyvale-Santa Clara, Calif., followed by Anaheim-Santa Ana-Irvine, Calif., and Corpus Christi, Texas.

Association officials said that the number of unemployed construction workers is at a series low and urged federal officials to boost investments in career and technical education. They warned that firms may not be able to keep pace with growing demand for construction unless more young adults are exposed to, and consider pursuing, high-paying careers in construction.