Despite the loss of around 1,000 jobs in June, unemployment in the United States construction industry has dropped to four-year lows, the latest figures from the US Department of Labour suggest.
Though overall employment levels throughout the industry remain flat and the decline in unemployment rates is thought to be a reflection of seasonal influences and workers leaving the industry, the news is being treated in a broadly positive light.
According to the latest figures from the US Department of Labour, the construction industry unemployment rate throughout the US dropped from 12.8 per cent in June to 12.3 per cent last month, the lowest level on record since 2008.
But while the drop in unemployment came as welcome news, actual employment levels fell by 1,000 (not seasonally adjusted) and remain virtually unchanged during the year, meaning that conditions in the country’s construction labour market are not strong.
Consistent with the combination of a strengthening residential sector but stagnant conditions outside of housing, the non-residential sector is leading the employment decline.
Around 9,500 non-residential speciality trade contractor positions were shed last month along with around 500 non-residential building jobs.
In contrast, the residential building sector saw a net gain of 5,800 jobs, and while the number of people employed as specialty trade contractors in the housing sector fell by 3,100 last month, it is still up by 5,500 compared with the same time last year.
Meanwhile, the number of jobs in civil or engineering construction increased by 6,200 in July and is up by 10,800, or 1.1 per cent, since July 2011.
Associated Builders and Contractors chief economist Anirban Basu cautions that the current drop in unemployment may primarily represent seasonal factors and workers leaving the industry, and that the lack of employment growth reflects uncertainty among decision makers.
“Given the fact that construction job growth has continued to be sluggish, the primary driver behind falling construction unemployment rates appears to be that construction workers have secured employment in other industries that have been adding jobs more quickly, including distribution and manufacturing,” Basu said. “Taking a larger view, there is the possibility that seasonal factors are partially responsible for the decline in construction unemployment. However, the lack of construction employment growth is consistent with the general level of unease felt by many decision makers, including lenders.”
He added that the uncertainty surrounding the economy and policy decisions has served to put a damper on construction starts, which has led to constraints on hiring.
Still, Basu is encouraged by reports that overall employment levels across the nation were up during the month by 163,000, a figure he says allays fears of any impending recession and thus bodes well for the immediate construction industry outlook.
“The U.S. economy remains resilient and is positioned for steady expansion during the next several months” he said. “In that case, the expectation is that the number of non-residential construction jobs would also trend a bit higher in the foreseeable future.”