January 5, 2018

Industry Employment Reaches Nine-Year High and Unemployment Rate Falls to 5.9 Percent; Association Officials Say Most Construction Firms Predict they Will Continue Adding Jobs in 2018 Amid Strong Demand 

Construction employment increased by 30,000 jobs in December to the highest level since September 2008, according to an analysis of new government data by the Associated General Contractors of America. Association officials said that, according to an outlook the association released earlier this week, most firms expect to continue adding jobs this year amid expectations demand for construction will expand.

“Employment and pay in construction have risen more rapidly over the past year than in the economy overall, as the supply of unemployed, experienced workers continues to shrink,” said Ken Simonson, the association’s chief economist. “Construction pay is now almost 10 percent higher than the private-sector average. Nevertheless, contractors report increasing difficulty filling many types of hourly craft and salaried openings, given the low rate of unemployment throughout the economy, including construction.”

Construction employment totaled 6,993,000 in December, a gain of 30,000 for the month and 210,000, or 3.1 percent, for all of 2017. The economist pointed out that the full-year growth rate in industry jobs was more than double the 1.4 percent rise in total nonfarm payroll employment.

Residential construction—comprising residential building and specialty trade contractors—added 18,200 jobs in December and 86,400 jobs, or 3.2 percent, over the past 12 months. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment increased by 11,800 jobs in December and 123,100 positions, or 3.0 percent, over 12 months.

The number of unemployed jobseekers with recent construction experience fell to 554,000 in December, down from 670,000 in December 2016, while the unemployment rate in construction dropped to 5.9 percent last month from 7.4 percent a year earlier. The rate and number of unemployed were the lowest for December in the 17-year history of the series. These declines show how difficult it has become for the industry to find experienced workers, Simonson said.

Average hourly earnings in the industry climbed to $29.24, a rise of 3.0 percent from a year earlier.  That was a steeper increase than for the total private sector, which rose 2.5 percent to an average of $26.63 per hour. The economist noted that construction pays 9.8 percent more per hour than the average nonfarm private-sector job in the United States.

The new jobs figures come as 75 percent of firms that responded to a survey organized by the association and Sage Construction & Real Estate report they plan to expand their headcount in 2018. One reason most firms plan to add staff is that contractors are the most optimistic they have been about growing demand for their services since the association first began preparing its annual outlook in 2009.

“Most construction firms plan to add workers during 2018 as demand for all types of construction continues to expand,” said Stephen E. Sandherr, the association’s chief executive officer. “The biggest challenge they face will be finding qualified workers to hire as the labor market continues to tighten.”