Unemployment in the United States construction industry has plummeted and is now far lower than it was one year ago, the latest data suggests.
Despite moderate job growth in June, however, the nation’s construction labour market remains flat and the decline in unemployment largely represents a contraction of the construction labour force.
Data from the US Census Bureau indicates that unemployment in the construction industry plummeted from 14.2 per cent in May to 12.8 per cent last month.
Overall, the number of unemployed construction workers now stands at 1.04 million – down from 1.32 million at the same time last year when the unemployment rate stood at 15.6 per cent.
While part of the fall, at least in June, can be attributed to the addition of 2,000 jobs during the month, the bulk of this drop represents workers leaving the industry. One year ago, the overall size of the US construction workforce was 8.46 billion; now that figure stands at just 8.12 billion.
Indeed, compared with pre-GFC levels, the number of jobs available in the industry is down by almost half in residential construction and around one-fifth in non-residential construction.
Still, thanks to a surge in specialty trade contractor positions (up 10,000 in June), overall employment numbers throughout the industry did experience a healthy increase of 2,000 jobs in the month.
Perhaps surprisingly however, given recovery in homebuilding activity of late, jobs in residential construction remain scarce, with employment numbers in this sector (566,000) slipping by 5,900 in June and down by 5,200 compared with the same month last year.
Meanwhile, the engineering construction sector shed 2,000 jobs last month and the non-residential sector (667,500) shed 1,000 jobs – though jobs in non-residential construction were up marginally when compared with one year ago.
Associated Builders and Contractors chief economist Anirban Basu says June’s employment report was good news for the industry but disappointing for the economy overall.
In the first three months of the year, Basu says, the overall economy experienced average monthly job growth numbers of 226,000; in the past three months, that figure has fallen to 75,000. Overall, the nation added 80,000 jobs in June.
Basu says the construction sector employment expansion in June is in part a reflection of an uptick in the economy toward the end of last year, an effect which will now subside as the broader economy has slowed down again.
“The economy today is likely expanding at less than two percent, consistent with expectations of flat non-residential construction spending and suppressed hiring over the near-term,” Basu says.
On the positive side, Basu sees some of the current economic uncertainty abating in the near-term, given recent progress in Europe regarding sovereign debt and banking issues, as well as some recent signs of legislative progress in the United States.
That would help reignite non-residential construction’s recovery, he says, though any improvement in industry fortunes is unlikely to be immediate.