Construction Spending, Employment Hit Three-Year Highs

Revised government data issued recently show the construction industry is contributing substantially to economic and employment growth, according to an analysis by the Associated General Contractors of America.

Association officials noted that construction employment in January rose for the eighth consecutive month, while construction spending in December increased for the ninth month in a row. Both totals were the highest levels in more than three years.

“The new employment data show the industry lost even more jobs in the recession than previously estimated but has added almost 300,000 jobs in the past two years, including nearly 100,000 since September,” said Ken Simonson, the association's chief economist. “Meanwhile, the steady rise in construction spending since last March suggests contractors will be hiring even more workers in the months ahead.”

Construction firms employed 5.731 million people in January, a gain of 28,000 from December and 102,000 or 1.8% from a year ago, Simonson noted. The industry unemployment rate, which is not seasonally adjusted and thus is typically high in January, fell from 17.7% in January 2012 to 16.1% last month.

Both residential and nonresidential construction added jobs for the month and the year. Residential construction — building and specialty trade contractors — added 14,500 jobs in January and 53,200 (2.6%) over 12 months. Nonresidential construction — building, specialty trade and heavy and civil engineering firms — expanded by 13,700 employees in January and 48,900 (1.4%) over the year-ago level.

Construction put in place totaled $885 billion in December, the most since September 2009 and a pickup of 0.9% from November and 7.8% compared with December 2011. Private residential construction spending jumped 2.2% for the month and 24% year-over-year. Private nonresidential spending grew 1.8% and 7.6%, respectively. These increases more than offset a plunge in public construction spending of 2.6% for the month and 17% over 12 months.

“We are likely to see continued strong growth in single- and multifamily homebuilding, moderate increases in private nonresidential construction and shrinking public-investment levels for the next several months,” Simonson said. “Those trends, in turn, will lead to a steady increase in the number of construction jobs.”