Nonresidential Construction Employment Falls in May

"A combination of factors, including still tight credit and high commercial vacancy rates, conspired to reverse what had been growing construction employment momentum." —ABC Chief Economist Anirban Basu

Employment in the nation’s nonresidential construction industry fell by 4,200 jobs in May after an across-the-board jobs gain the previous month, according to June 4 employment report by the U.S. Labor Department. Since May 2009, the nonresidential building construction sector has lost 55,400 jobs, or 7.5 percent, and the employment stands at 684,300.

Hardest hit was the nonresidential specialty trade sector where employment fell by 16,500 jobs for the month and 251,700, or 11.3 percent, since May 2009. The heavy and civil engineering construction sector lost 7,400 jobs in May and 53,200, or 6.2 percent, since the same time last year.

Residential construction employment slipped by 3,300 jobs last month and has lost 66,400 jobs, or 10.3 percent, since May 2009. The construction industry as a whole lost 35,000 jobs in May – the first monthly job loss since February. Over the past twelve months, the industry lost 529,000 jobs, or 8.6 percent of total employment. The national unemployment rate for the construction industry in May is 20.1 percent.

Overall, total employment for all industries was up by 431,000 jobs in May, with temporary Census workers accounting for 411,000 of those jobs. Private sector employment gained 41,000 jobs for the month. On a year-over-year basis, total employment is down 585,000, or 0.4 percent, and the nation’s unemployment rate in May stands at 9.7.

Analysis
“At first glance, today’s jobs report could be viewed as very positive. However, nothing could be more disappointing,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Almost all of the jobs added are temporary federal government positions, and for the construction industry as a whole, last month represented a setback.

“Undoubtedly, a combination of factors, including still tight credit and high commercial vacancy rates, conspired to reverse what had been growing construction employment momentum,” said Basu. “In addition, the lower unemployment rate for the industry tells us that more people have given up trying to find construction jobs."

“Meanwhile, the financial markets are responding badly to today’s employment release. The data indicates that the nation’s economic recovery remains fragile and has not yet become self sustaining,” Basu said. “It will be interesting to see if job growth numbers turn negative again later this year once Census Bureau hiring begins to trail off.”