By Roland Murphy for AZBEX
The U.S. construction industry added a net 1,000 new jobs in October and construction unemployment is down in 42 states year-over-year as of the end of September, according to a pair of recent announcements from Associated Builders and Contractors.
Construction unemployment in Arizona is up approximately 0.2% year-over-year for September.
The national construction unemployment rate dropped 1.1% for the month, going from 4.5% down to 3.4%, according to ABC’s analysis of U.S. Bureau of Labor Statistics data.
Nonresidential construction employment is still lower than its pre-pandemic peak, but ABC reports residential construction has fully recovered. September seasonally adjusted payroll for residential was 162,000 more than pre-pandemic numbers, while nonresidential was 67,000 less.
“Higher interest rates are having a negative effect on plans for new construction projects; nonetheless, construction employment continues to rise as builders work on their backlog of projects,” said Bernard Markstein, president and chief economist of Markstein Advisors, who conducted the analysis for ABC.
“Further, builders are still reporting a shortage of skilled workers. Although employers want to hold on to their workers, slowing demand for new projects along with completion of older projects eventually is likely to force some contractors to reduce their workforce. At the same time, construction employment will be helped by spending on projects implemented through the Infrastructure Investment and Jobs Act.”
In looking at Bureau of Labor Statistics numbers, ABC reports industry employment has risen by 266,000 jobs, up 3.6% year-over-year for October. The construction unemployment rate increased to 4.1% in October. Unemployment across all industries rose from 3.5% in September to 3.7% last month.
“The country’s job market remains strong, and that means we remain in a bad place because, in this economic environment, the good news is bad news and vice versa,” said ABC Chief Economist Anirban Basu. “We can expect to hear many such ironic statements during the months ahead. A few days ago, we learned that America had 10.7 million available, unfilled jobs in September. More than 400,000 of these are construction industry job openings. Today we learned that employers continue to hire, with the overall economy adding 261,000 jobs in October.”
Basu went on to explain that, for inflation to hit the Federal Reserve target of 2%, the labor market needs to weaken. Consequently, interest rates will continue to rise to curtail inflation’s growth. As interest rates and borrowing costs rise, demand for construction services will erode.
“While it is unfortunate that economic stakeholders have to wait for bad news before good news arrives,” he said, “contractors still have healthy backlogs, according to ABC’s Construction Backlog Indicator, and that will carry many through 2023 even if a recession arrives in America next year.”
As the demand for goods and services gets weaker, inflation will start to go down. “The good news is that bad news will eventually arrive,” Basu said.