Buoyant construction hiring bolsters March jobs report

AGC economist notes nonresidential employment grows at double the overall rate

News AGC of America April 10, 2007
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"Construction was the sparkplug for last month's employment engine," Ken Simonson, chief economist for the Associated General Contractors of America (AGC), said last week. Simonson was commenting on the April 6 employment report from the Bureau of Labor Statistics.

"Construction accounted for nearly one out of three net new jobs in March--56,000 out of 180,000 in the entire nonfarm payroll sector--even though the industry represents less than 6% of total employment," Simonson said. "Part of the gain was a bounceback from a weather-induced dip in hiring in February.

"But the real news lies buried deeper," Simonson contended. "The three categories of nonresidential construction--nonresidential building, specialty trade contractors, and heavy and civil engineering--have added 3.4% to their ranks over the past year. That is more than double the all-industry rate of 1.4%. The 146,000 nonresidential construction jobs added in that time outpaces the 125,000, or 3.6%, lost in residential building and specialty trades.

"I expect nonresidential hiring to continue if companies can find qualified workers," Simonson said. "Architects and engineers, a leading indicator for nonresidential construction, expanded their headcount by 4.2% over the past 12 months. Construction spending reports for February were strongly positive, aside from single-family homebuilding, and most of those projects will continue for months. Energy and power, hotels and resorts, and hospitals look especially vibrant for construction.

"Costs are a significant concern, however, especially for public projects," Simonson concluded. "The jobs report showed hourly wages in construction rose 5.2%, compared to 4% for all private production and nonsupervisory employees. More worrisome are recent jumps in prices of steel, stainless, copper and diesel fuel. Materials and components are likely to wind up the year at least 6 to 8% higher than in December 2006."

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