Article reprinted from Western Roofing magazine Sept/Oct 2007.

 

 

Construction Outlook

Non-residential Construction Jobs Jump as Residential Retreats

by Kelley Keeler, The Associated General Contractors of America

 

"Non-residential construction jobs jumped in January, while homebuilding employment grew chillier," said Ken Simonson, chief economist for The Associated General Contractors of America (AGC). Simonson was commenting on the January employment report from the Bureau of Labor Statistics (BLS).

                  "In January, construction accounted for one out of five net new jobs in the entire non-farm economy, 22,000 out of 111,000," Simonson noted. "Not bad for an industry that constitutes less than 6% of total non-farm employment.

                  "Non-residential construction employment growth has been sizzling," Simonson continued. "Over the past 12 months, non-residential building contractors and non-residential specialty trades have boosted employment by 160,000, or 5%. Heavy and civil engineering construction has added 25,000, or 2.5%. Those rates greatly outstrip the 1.6% growth rate for non-farm payroll employment as a whole.

                  "A further favorable omen for non-residential construction is that architectural and engineering employment rose more than 5% in the past year," Simonson commented. "That should translate into additional construction work in the next several months. I expect several non-residential categories to do especially well this year, particularly energy and power-related construction, hospitals, hotels, and resorts.

                  “In contrast, residential building and specialty trades employment slipped again in January, bringing the year-over-year decline to 84,000 jobs, or 2.5% of the January 2006 total," Simonson observed. "I expect home builders will continue to shrink for most of 2007, until they see a marked upturn in home sales."

                  "Construction wages rose 4.5% in the last 12 months, outpacing the 4% increase for all private industry production workers," Simonson stated. "Part of this reflects a changing mix of construction jobs, away from lower-skilled homebuilding and remodeling, to skilled non-residential crafts. But it may also indicate that contractors are ratcheting up pay to find the workers they need.

                  "BLS sharply increased its estimate of total construction employment as part of its normal annual revision process for all industries," Simonson concluded. "The January 2007 count of 7,715,000, seasonally adjusted, is more than 200,000 higher than appeared likely a month ago." •••