Construction employment grows by 23,000 in September

The U.S. construction industry added 23,000 new positions in September, according to an Associated Builders and Contractors, Washington, analysis of data released by the U.S. Bureau of Labor Statistics.

In the past 12 months, the industry added a total of 315,000 net new jobs, an increase of 4.5 percent. Nonresidential construction employment expanded by 18,600 net jobs monthly, while the residential sector added just 4,400 net positions, according to an ABC news release.

Though construction unemployment rose to 4.1 percent in September, it remains low by historical standards, the association says. National unemployment dropped to 3.7 percent across all industries, the lowest rate since December 1969.

“For several years, job growth has been just right—not too hot, not too cold,” says ABC chief economist Anirban Basu. “The term ‘Goldilocks economy’ is often tossed around, with the implication being that employment growth has been solid enough to keep consumers spending and businesses confident, but not so fast that inflation and interest rates spike, causing asset prices to fall in value.”

Basu says economists were collectively expecting around 180,000 jobs to be created in September and an official rate of unemployment of 3.8 percent.

"That’s effectively what occurred,” Basu says. “But these are not the important numbers. The most important number is average hourly earnings growth, which has been at the high point of the cycle recently. Conventional wisdom suggests that if average hourly earnings were to grow 3 percent or better on a year-over-year basis, that would be bad news from the perspective of financial markets. This suggests that the grinding search for talent is driving up compensation costs and that interest rates will continue to head higher.”

Basu says contractors will notice an increase in borrowing costs.

“What’s more, construction firms will find it increasingly difficult to recruit labor,” Basu says. “This week’s announcement by Amazon regarding its increase in minimum wages indicates that firms are having to pay more to attract and retain workers. It is perfectly conceivable that more junior members of the construction workforce also heard about Amazon’s new $15 minimum wage."