Construction Jobs Up Despite Fragile Industry
By: Lori Tobias - CEG CORRESPONDENT
Thirty-nine states posted gains in construction jobs over the past year, but analysts say the industry remains fragile.
“We think the market is soft,” said Brian Turmail, spokesman of The Associated General Contractors of America. “Private sector demand is getting weak and employment gains can be fleeting.”
That concern was underscored by Mississippi, which led the country with a 17-percent increase, or 8,000 jobs, over 2012. Nonetheless, the southern state lost more than 2 percent — 1,300 — of those jobs from October to November, placing it at 49th out 50 states for growth.
Conversely, Indiana led the monthly rankings with a 4.8 percent increase — 5,400 construction jobs — but saw a 3.4 percent decline or about 4,100 jobs over last year.
California added 31, 500 jobs for an increase of 5.2 percent. But even that is a mixed picture.
“They top the list in total jobs added,” Turmail said. “But it's a tale of two markets. In coastal California, you can't even find enough workers But when you get into that central valley, it's still kind of sleepy.”
Other states reporting good news include Connecticut with an 11 percent increase, Missouri, at 9.8 percent, and Georgia, which added, 13, 200 jobs.
“Connecticut is a bit of a surprise,” Turmail said. “New England — outside of Boston — has had a harder time getting into a recovery.
Montana also was a surprise, but not a good one, Turmail said. Construction managers report work is good, with a lot of new construction activity on the east side of the state. But the data, as reported by the Labor Department, indicates the state is still losing construction jobs.
For the month, 30 states added construction jobs, 16 lost jobs, while employment stayed steady in four states.
The biggest driver of the jobs was residential construction, both in the single- and multi-family markets. Activity in the energy sector was also up, as was, surprisingly, the lodging industry.
“There was a lot of renovation of facilities,” Turmail said. “In 2006 through 2008 when money was very cheap, there was a lot of hotel construction. There was so much overbuilt hotel capacity. What we're seeing now is either hotel owners upgrading or putting money back in and renovating them and keeping them competitive as opposed to building new hotels from scratch.”
But all that good news is undermined by declines in other areas, like retail and office space. The trend toward on-line retailing has dampened the demand for new retail space, while teleworking is shrinking the footprint for office space and will weaken demand for new space even as employers add employees.
There also was a surprise spike in public spending, but analysts don't expect to see that again. On the contrary, public spending has been trending down.
“The federal government is not pumping as much money into public works,” Turmail said. “State and local spending will continue to be weak, but as the economy improves you will see a lot more municipal spending. You can expect to see increased construction in schools, fire departments and police stations, but that's probably later next year.”
The ACG again urged Congress and President Obama to finalize water resources legislation and to act swiftly to renew long-term highway and transit legislation.
“At this point, it is hard to predict whether construction employment will continue to expand in many states next year,” said Stephen E. Sandherr, the association's chief executive officer. “Passing vital infrastructure measures will help protect construction employers from any softening in private sector demand, while giving the economy a needed boost.”
For the ranking of each state, visit http://www.agc.org/galleries/default-file/State%20Empl%20201311%20rank.pdf.