"In November, the economy essentially wiped out the previous gains that had been registered in the construction industry." —ABC Chief Economist Anirban Basu.
Summary
National construction industry employment fell by 20,000 jobs in November pushing the unemployment rate to 12.2 percent, up from 11.4 percent the previous month, according to the Dec. 7 employment report by the U.S. Department of Labor. Year-over-year, construction employment is down by 6,000 jobs, or 0.1 percent.
The nonresidential building construction sector lost 4,300 jobs in November. The residential building construction sector lost 6,800 jobs for the month and has lost 15,700 jobs, or 2.8 percent, since November 2011. Nonresidential specialty trade contractors lost 7,400 jobs for the month and have lost 16,000 jobs, or 0.8 percent year-over-year.
In contrast, residential specialty trade contractors added 3,200 jobs in November and have added 20,700 jobs, or 1.4 percent, compared to the same time last year. Heavy and civil engineering construction sector employment decreased by 3,800 jobs in November, but has increased by 5,900 jobs, or 0.7 percent, during the past twelve months.
Across all industries, the nation added 146,000 jobs as the private sector expanded by 147,000 jobs and the public sector shrunk by 1,000 jobs. The national unemployment rate decreased to 7.7 percent in November from 7.9 percent in October.
Analysis
“If there was any question that the construction industry continues to struggle in this economy, today’s Labor Department employment report provided the answer,” said Associated Builders and Contractors Chief Economist Anirban Basu. “While the nation added 146,000 jobs, the construction industry lost 20,000 jobs.
“The nonresidential subsectors lost a combined 11,700 jobs for the month, not including those employed in heavy and civil engineering construction, which lost an additional 3,800 jobs,” Basu said. “In November, the economy essentially wiped out the previous gains that had been registered in the construction industry.
“The other major sector to lose jobs in November was manufacturing,” said Basu. “The fact that construction and manufacturing both lost jobs is not coincidental. Many economic decision makers have adopted a wait-and-see attitude due to the nation’s fiscal cliff and other sources of uncertainty, including geopolitical uncertainty.
“While many businesses maintain their standard daily operations, and some even add jobs in the process, larger decisions and investments are put on hold,” Basu said. “These decisions often revolve around major investments in plants and equipment. When these types of expenditures are postponed, related industries like manufacturing and construction suffer.
“The overall economy continues to expand, and there is evidence to suggest the existence of pent-up demand for construction,” remarked Basu. “However, this demand is tempered by a sea of uncertainty, much of which originates from Washington, D.C.
“The expectation is the economy will improve once the fiscal cliff issues are resolved,” Basu said. “However, if the issues are not put to rest, the broader economy will likely head back toward recession sometime next year.”