Solid Workforce Growth in December
Positive Fourth-Quarter Results As Well
Employment in the construction industry experienced a significant expansion trend in the latter part of 2015. Associated Builders and Contractors said 45,000 net new jobs were added in December, compared to November, and that the industry grew by 128,000 positions in the fourth quarter, compared to the third quarter.
In a breakdown by sector, the nonresidential group increased by 16,400 new jobs in December; the residential category expanded by 23,100 new positions; and heavy and civil engineering added another 4,800 workers.
"Many contractors continue to report strong backlogs, indicating that nonresidential construction spending will remain a key economic driver in 2016," said Anirban Basu, chief economist for the ABC. "Given the mounting level of concern regarding the U.S. economic outlook in the face of emerging global deflationary forces and unstable geopolitics, today's employment report is a positive sign. Consumer spending will be the primary economic driver in 2016 and the U.S. economy would fail to achieve even 2 percent growth should the labor market begin to sputter."
Breaking down the data even further:
Residential construction, excluding contractors, expanded by 5,000 jobs in December, and is up by 32,700 jobs or 4.8 percent on a year-over-year basis. Residential specialty trade contractors alone added 18,100 new jobs for the month, and this subgroup has increased by 104,500 jobs or 6.1 percent since December 2014.
Nonresidential construction, excluding contractors, expanded by 5,100 jobs in December, and is up by 9,900 jobs or 1.4 percent from a year-ago. Nonresidential specialty trade contractors added 11,300 jobs for the month, and this subgroup has expanded by 95,300 jobs or 4.3 percent from the previous year.
Heavy and civil engineering is up by 20,200 positions or 2.2 percent on a year-over-year basis.
Significant Workforce Expansion in November
Construction industry employment grew significantly in November, mainly because of a healthy gain in the residential specialty contractor field.
The National Association of Home Builders analyzed data from the Bureau of Labor Statistics, specifically a Job Openings and Labor Turnover Survey, and found that homebuilders and remodelers added 32,100 jobs in the month of November.
This was the single largest monthly increase during the post-recession period, the NAHB said.
Open construction sector jobs increased to 126,000 in October from 119,000 in September. The cycle high of 168,000 was set during March.
Hiring in the residential construction industry had been slowing over the course of 2015. But the jump in November puts the average monthly rate of job gains at 11,000.
Residential construction employment now stands at 2.5 million, with 704,000 tradespeople working for builders and 1.81 million employed by residential specialty trade contractors.
Over the last 12 months homebuilders and remodelers have added 128,000 jobs on a net basis.
"Since the low point of industry employment following the Great Recession, residential construction has gained 524,900 positions," the NAHB said.
In November, the unemployment rate for construction workers fell to 6.7 percent on a seasonally adjusted basis, up slightly from the cycle low of 6.5 percent set in July. The unemployment rate for the construction industry has been on a general decline since reaching a peak rate of 22 percent in February 2010.
Many builders continue to cite access to labor as a top business challenge as the market recovers, the NAHB said.
Source: Bureau of Labor Statistics http://www.bls.gov/jlt/Strong Forecast for Nonresidential Building
Strong consumer spending should keep the current economy humming in recovery mode well into 2016, the Associated Builders and Contractors has forecast.
The ABC is predicting nonresidential construction spending will increase 7.4 percent next year, and that employment and construction backlogs will expand along with it.
"The current recovery could end up challenging the lengthiest recovery in U.S. history, which lasted 120 months between March 1991 and March 2001," said Anirban Basu, chief economist for the ABC.
"ABC's leading indices each suggest that 2016 will be another solid year for the typical U.S. nonresidential construction firm," Basu said.
ABC's Construction Confidence Index measures builders' perceptions of hiring, profit margins and projected sales growth. According to the most recent survey, overall contractor confidence has increased with respect to both sales (67.3 to 69.4) and profit margins (61 to 62.9).
"And while the pace of hiring is not expected to increase rapidly during the next six months, largely because of the lack of suitably trained skilled personnel, the rate of new hires will continue at a steady pace," Basu said.
ABC's Construction Backlog Indicator also suggests there will be strong demand for commercial and industrial projects in 2016. The latest Backlog survey shows the average backlog at 8.5 months at the middle of 2015. Heavy industrial projects surged in the West region, causing the overall Backlog to grow significantly.