September construction statistics show some positives
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September construction statistics show some positives

Employment figures stable, but two different construction association economists express concern about loss of momentum.

October 5, 2020

The Washington-based Associated Builders and Contractors (ABC), in an analysis of data released by the United States Bureau of Labor Statistics, points to the construction industry having added 26,000 net jobs in September. Adds ABC, “During the last five months, the industry has added 689,000 jobs, recovering approximately 64 percent of the jobs lost since the start of the pandemic.”

Employment in the nonresidential construction employment sector rose by 4,000 net jobs in September, which the Arlington, Virginia-based Associated General Contractors (AGC) has interpreted as a sign of stagnancy in that sector.

“Construction is becoming steadily more split between a robust residential component and generally stagnant private nonresidential and public construction activity,” says Ken Simonson, the AGC’s chief economist.

Simonson says in the three months since June, residential construction employment has increased nearly 3 percent while nonresidential employment has slipped 0.2 percent. “As project cancellations mount, so too will job losses on the nonresidential side unless the federal government provides funding for infrastructure and relief for contractors.”

ABC Chief Economist Anirban Basu also expresses concern about a loss of economic momentum. “The economic recovery that began in May is losing momentum, as Congress has failed to pass another stimulus bill to offset the continued impacts of the pandemic on travel, tourism energy production and many other industries,” says Basu.

Basu points to the same split between the residential and nonresidential sectors cited by Simonson. “While nonresidential construction employment expanded in September as some projects that had been postponed or interrupted came back to life, the number of jobs gained was rather unimpressive. In May and June, nonresidential construction added more than 228,000 and 76,000 jobs on net, respectively. But commercial real estate conditions are poor, credit conditions have tightened, and state and local government finances have been undermined. Developers and others continue to contemplate the longer-term implications of corporate bankruptcies, recent layoff announcements, remote work and the possibility of a second recession.”

Adds Basu, “Anecdotal information suggests that bidding opportunities are becoming scarcer and competition for new projects fiercer, as indicated by ABC’s Construction Backlog Indicator, although a significant stimulus package—especially with a substantial infrastructure component—could offset construction employment declines during the winter months.”

The AGC also sees a role for federal and state government intervention. “Until businesses are confident enough to invest in new development projects and state and local governments are able to invest in public works, the commercial construction sector will not be able to fully recover,” says Stephen E. Sandherr, the association’s CEO. “Protecting honest employers, improving our infrastructure and helping state and local officials fix schools and improve other public facilities will create the jobs people need and the momentum our economy requires.”