Construction Employers Add 36,000 Jobs in January and 226,000 over the Year

Hourly Earnings Rise 2.9 Percent as Sector Strives to Draw in New Workers

March 2018

Construction employment increased by 36,000 jobs in January to the highest level since August 2008, according to an analysis of government data by the Associated General Contractors of America. Association officials said a possible new measure being discussed in Washington that would invest an additional $1.5 trillion in repairing and improving infrastructure would both help the sector continue to add jobs and attract new workers.
    
“The construction industry has consistently added workers at nearly double the rate of the overall economy,” said Ken Simonson, the association’s chief economist. “The outlook remains positive for further growth in the industry. But finding workers to complete all projects will be a challenge with unemployment so low overall and in construction.”
    
Construction employment totaled 7,099,000 in January, a gain of 36,000 for the month and 226,000, or 3.3 percent, over 12 months. The economist pointed out that the year-over-year growth rate in industry jobs was more than double the 1.5 percent rise in total nonfarm payroll employment.
    
Residential construction—comprising residential building and specialty trade contractors—added 19,000 jobs in January and 88,400 jobs, or 3.3 percent, over the past 12 months. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment increased by 16,400 jobs in January and 137,200 positions, or 3.3 percent, over 12 months.
    
The number of unemployed jobseekers with recent construction experience fell to 707,000 in January, down from 859,000 in January 2017, while the unemployment rate in construction dropped to 7.3 percent last month from 9.4 percent a year earlier. The number and rate were the lowest for January since the series began in 2000. Unemployment data by industry are not seasonally adjusted, and winter figures for construction are normally higher than they are for total nonfarm employment, but these declines show how difficult it has become for the industry to find experienced workers, Simonson said.
    
Average hourly earnings in the industry climbed to $29.33, a rise of 2.9 percent from a year earlier. The economist noted that construction pays nearly 10 percent more per hour than the average nonfarm private-sector job in the United States.
    
Construction officials said that a new presidential push to boost infrastructure investments by $1.5 trillion over the next 10 years would give a needed boost to infrastructure contractors who, according to construction spending figures released Feb. 1, have seen lagging demand compared to other market segments. Moreover, significant new and long-term investment in infrastructure would help encourage more people to consider high-paying careers in construction.
    
“Bringing our aging infrastructure back to a state of good repair will support short-term economic growth while making our economy more efficient and competitive over the long-term,” said Stephen E. Sandherr, the association’s chief executive officer. “These new investments will also send a clear signal to new workers to consider careers in construction and the middle-class life those jobs support.”
    
Overall construction input prices increased 1.1 percent in January, reversing a slight decline in December 2017, according to an ABC analysis of Bureau of Labor Statistics data released Feb. 21. Compared to this time last year, overall construction materials prices are up 4.9 percent. Nonresidential construction materials prices are up 4.7 percent year over year and up 1 percent on a monthly basis.
    
The price of natural gas fell 13.1 percent in January and is down 31 percent on a year-over-year basis. In stark contrast, the price of crude petroleum rose 11.6 percent in January on a monthly basis and is 30.3 percent above its year-ago level. February has been different to date, with burgeoning U.S. production helping push down the price of oil.
    
“The expectation is that construction materials prices will generally edge higher during the course of 2018,” said ABC Chief Economist Anirban Basu. “After all, both domestic and global economies are strengthening, business and investor confidence is elevated and construction backlog is rising. On top of that, the U.S. dollar has weakened in recent weeks, translating into more aggressive increases in the price of imports.
    
“One possible exception is oil. U.S. rig counts have been rising recently in response to North American oil prices that recently topped out at $65 per barrel,” said Basu. “Unlike producers in other parts of the world, American producers appear willing and able to respond quickly to price shifts. The implication is that if oil prices rise from current levels, America’s producers will respond quickly with additional supply and stabilize prices. This is precisely the dynamic that we have observed during the past several weeks.
    
“The typical contractor should expect materials price increases in the range of 5 percent this year. Larger increases are possible, but industry demand for materials will be constrained by growing skills shortages,” said Basu. “There is only so much output that America’s construction firms can deliver during any given period given workforce constraints, and those constraints serve to limit the demand for materials at any given moment.”