Winter Chills Construction Employment

“Calendar and climate quirks combined to chill construction employment in February, but nonresidential segments should rebound this month,” says Ken Simonson, chief economist for the Associated General Contractors of America (AGC), commenting on the February employment report from the Bureau of Labor Statistics (BLS).

“In February, construction employment tumbled by 62,000, seasonally adjusted—the largest one-month slide since 1991,” Simonson observes. “Weather anomalies deserve some of the blame, along with the housing slowdown.”

Simonson continues, “Employment estimates are based on the payroll period that includes the 12^th day of each month. In February, that included a week in which ice storms blanketed much of the U.S., whereas in January, the 12th was the end of an exceptionally balmy week. As a result, some contractors may have started jobs in January that normally would not have been done until later. Conversely, hiring may have been postponed in mid-February.”

However, Simonson says he believes nonresidential construction will begin adding jobs soon. Two encouraging signs are growth in architecture and engineering jobs and growth in nonresidential categories themselves, according to Simonson. “A/E employment has risen nearly 5 percent in the past 12 months. I expect their handiwork to show up in refinery, power plant, manufacturing, hotel and hospital construction over the next several months,” Simonson says. In addition, “nonresidential construction categories themselves have been growing, aside from the February hiccup. From February 2006 to February 2007, combined employment in nonresidential building, nonresidential specialty trades and heavy and civil engineering construction increased by 115,000 or 2 percent, nearly double the 1.5 percent rise in total nonfarm payroll employment. Meanwhile, Census Bureau data shows that nonresidential spending is on a tear—up 15 percent in January 2007 compared to January 2006.”

Simonson says he remains confidant that the nonresidential construction industry will be healthy throughout 2007 and likely beyond.