Construction employment rose by 20,000 in September and the industry’s unemployment rate fell to a six-year low of 8.5%, while construction spending increased for the fifth consecutive month in August, according to an analysis of new government data by the Associated General Contractors of America (AGC). Association officials cautioned that the data does not address any potential impacts from the recent federal government shutdown.
“Both of these reports show the industry was doing relatively well before the federal government shutdown forced many firms to hit the pause button,” said Ken Simonson, AGC's chief economist. “But the shutdown likely disrupted a wide variety of projects and may have caused private investors and developers to delay decisions about new projects or plant expansions. As a result, future spending and hiring gains may be weaker.”
Construction employment totaled 5,826,000 in September, a gain of 20,000 from the August tally, which was revised up by 8,000 from the Labor Department’s initial estimate. The September figure is 3.4% higher than in September 2012, while aggregate weekly hours of all construction employees rose 4.2% over the year, indicating that companies are adding to existing workers’ hours in addition to hiring new employees. Employment climbed for the month and year in both residential and nonresidential construction.
The industry’s unemployment rate dropped sharply over the past year, from 11.9% in September 2012 to 8.5% in September 2013—the lowest September rate since 2007. The steep decline in the number of unemployed former construction workers suggests companies may have trouble finding experienced workers if the volume of projects continues to expand, as it did in August.
“Today’s spending report showed increases in August in residential, private nonresidential and public construction,” Simonson noted. “But on a year-over-year basis, public construction has continued its long decline, private nonresidential spending is mixed, and only home and apartment construction is booming.”
Total construction spending, as reported by the Census Bureau, climbed 0.6% in August from an upwardly revised July figure and 7.1% from August 2012. Private residential spending led the way with a 1.2% increase for the month and a 19% jump year-over-year. Private nonresidential spending eked out a 0.1% gain in August and a 4.3% rise over 12 months. Public spending rose 0.4% for the month but shrank 1.8% from a year earlier.
AGC officials warned that the industry’s recovery was likely impacted by the federal government shutdown. They urged federal officials to support vital water-resources legislation currently being debated in Congress. “Making long-delayed repairs to our aging ports and waterways will give the construction industry a needed boost and support broader economic growth,” said Stephen E. Sandherr, AGC’s chief executive officer.