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Overall spending and job gains expected to continue in 2013.
But Officials Warn That Public Investment Cutbacks May Undermine Recovery
Revised government data issued Friday 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 rose for the eighth consecutive month in January, 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 percent 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 percent in January 2012 to 16.1 percent last month.
Both residential and nonresidential construction added jobs for the month and year. Residential construction — building and specialty trade contractors — added 14,500 jobs in January and 53,200 (2.6 percent) 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 percent) 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 percent from November and 7.8 percent compared with December 2011. Private residential construction spending jumped 2.2 percent for the month and 24 percent year-over-year. Private nonresidential spending grew 1.8 percent and 7.6 percent, respectively. These increases more than offset a plunge in public construction spending of 1.4 percent for the month and 5.6 percent 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.”
Association officials said the rosy outlook could be undermined if public officials do not begin to increase investment in construction. They urged Congress to avoid an abrupt slowdown in federal funding that would occur if an across-the-board spending sequestration or a government shutdown occurs in March.
“Instead of making short-sighted cuts in programs to provide flood protection and clean water systems, Washington officials need to find a way to address out-of-control entitlement spending,” said Stephen E. Sandherr, the association’s chief executive officer. “And we must continue to give the private sector the kind of stability and certainty it needs to thrive.”
Construction has been a major driver of hiring in recent months, but now builders are having trouble finding the workers they need.
Friday’s January jobs report showed that construction added 28,000 jobs in January, about 18% of the the jobs created overall. It’s the fourth straight month of strong construction job gains as home building has rebounded. Low mortgage rates, rising home prices and low inventories of new homes for sale are expected to continue to boost the housing recovery through 2013.
But builders say hiring has been crimped because they and their subcontractors are unable to find the skilled construction workers.
“The bodies are just not there,” said Johnny Yates, vice president of Rampart Construction in the Dallas-Fort Worth area.
Rampart, which specializes in the booming multi-family home sector, added about 25 workers in 2012. The company now employs 85 people, which is about what it had at the height of the housing boom and more than triple what staffing fell to in 2010. But Yates doesn’t think he’ll be able to expand much further, because he can’t find qualified people.
When the bottom fell out of the construction industry after the housing bubble burst, Yates said many skilled workers left the field to find other jobs.
“People had to find other work to survive,” he said. Some of the laborers during the housing boom were immigrants who went back to their home countries and haven’t returned, he said.
His subcontractors, such as those that install sheet rock, have also had a difficult time filling their staffs and are working with smaller crews, which means projects take longer to complete.
Yates said Rampart will probably have to turn down some jobs this year because he doesn’t think he can find the staff he needs.
“If the work force was out there and available, there definitely would be more hiring,” he said.