New government data show the uneven nature of the construction industry’s recovery, as the sector added 22,000 jobs in July but suffered a pullback in spending in June, according to a recent analysis by the Associated General Contractors of America.
“Construction employment and spending are both rising at a moderate year-over-year clip, but there have been some setbacks,” said Ken Simonson, the association’s chief economist. “While prospects for private construction remain largely favorable, inadequate public investment still threatens to keep too many workers idle.”
Construction employment totaled 6,041,000 in July, the highest total since May 2009, while the industry’s unemployment rate of 7.5% was the lowest July number in seven years, Simonson noted. The sector’s employment rose by 211,000, or 3.6%, from a year earlier. Residential construction employers added 13,000 jobs in July and 115,600 (5.3%) over 12 months. Nonresidential construction employment increased by 9,100 for the month and 95,700 (2.6%) since July 2013. Simonson attributed the weaker growth in nonresidential employment to a decline in public construction spending.
“While the preliminary spending numbers for June show all segments of construction retreated from May levels, looking at the first six months of 2014 as a whole in comparison with the same period a year ago provides a more credible picture of construction trends than does a single-month snapshot,” Simonson added. “For the first half of 2014, private spending climbed at double-digit rates, while public construction shrank. I expect both patterns to continue.”
Construction spending in June totaled $950 billion at a seasonally adjusted annual rate, down 1.8% from the upwardly revised May total, Simonson said. Spending for the first half of 2014 as a whole increased 7.8% from the same period in 2013. Private nonresidential spending fell 1.6% in June but increased 12.6% year-to-date while private residential spending slipped 0.3% for the month but rose 10.3% year-to-date. Public construction spending slumped 4.0% from May to June and 0.9% year-to-date.
Association officials said a recent measure passed to keep federal highway and bridge funding at current levels through next spring will help, but the temporary fix will do little to clear uncertainty about future federal surface transportation investments beyond next May.