Plumbing and Mechanical

Oct. 5, 2007 ― Jobs Report Understates Nonresidential Construction Vigor

October 5, 2007
Nonresidential construction is still boosting the economy, today’s employment report from the Bureau of Labor Statistics shows, despite the homebuilding meltdown, says Ken Simonson, chief economist for the AGC.

Nonresidential construction is still boosting the economy, today’s employment report from the Bureau of Labor Statistics shows, despite the homebuilding meltdown, says Ken Simonson, chief economist for The Associated General Contractors of America. “In fact, nonresidential construction is far stronger than first inspection of the data reveals.”

Seasonally adjusted total construction employment fell 14,000 in September and was down 112,000 (1.5 percent) compared to the year before. “But that masks divergent trends in nonresidential and residential construction,” Simonson says.

"The BLS numbers show that over the past 12 months, employment in the three nonresidential categories ― nonresidential building, specialty trades, plus heavy and civil engineering ― climbed 42,000 or 1 percent,” Simonson comments. “Meanwhile, residential building and specialty trades employment supposedly shed 154,000 jobs or 4.5 percent.” According to Census Bureau figures for August ― and with all signs pointing to still less homebuilding ahead ― it's likely that residential employment is down roughly 16 percent. “That means about 400,000 'residential' specialty trade contractors are now doing nonresidential electrical, plumbing and other work,” he says. "A proper classification of these workers would show nonresidential construction has actually added more than 10 percent to its payrolls, outpacing nearly every other industry.

"Moreover, the BLS report shows there is more growth ahead. Architectural and engineering employment rose 3.0 percent in the past 12 months. Their output will turn into construction jobs in the next several months.”

Simonson has some forecasts for the year ahead: "I expect some pullback in office, retail and hotel construction, but more growth in energy, power and hospital work.” Simonson concludes. “Accelerating costs of labor and materials will again be tough for contractors, private owners and public agencies doing construction."