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AGC's Data DIGest: August 23-September 6, 2016

Contractors again report difficulty filling jobs; employment, spending rise less steadily

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

Filling craft positions and some salaried positions remains a challenge for contractors, according to participants in AGC's 2016 Workforce Survey, though slightly less so than in 2015. More than two-thirds (69%) of the 1,459 respondents stated they were having a hard time filling some hourly craft positions, AGC reported on August 31. In addition, 38% said they were having a hard time filling some salaried field positions; 33%, salaried office positions; and 15%, hourly office positions, while 8% reported no trouble filling any positions and 9% had no openings to fill. (In the 2015 version of the survey, 79% reported difficulty filling craft positions; 52%, salaried positions.) The hardest craft positions to fill were carpenters, reported by 60% of firms that currently employ them (vs. 73% in 2015); electricians, reported by 53% (60% in 2015); roofers, 50% (56% in 2015) and plumbers, 50% (54% in 2015). As in 2015, the hardest salaried positions to fill were project managers/supervisors, 50% (55% in 2015); estimating personnel, 31% (43% in 2015); and engineers, 28% (34% in 2015). About half of respondents said their firms increased base pay rates (48% for hourly craft workers, 43% for salaried workers) because of difficulty filling positions. One-fifth of firms provided incentives/bonuses (hourly, 20%; salaried, 27%) or increased their portion of benefit contributions and/or improved employee benefits (hourly 22%; salaried, 21%). These results were similar to those in 2015. Firms used a variety of methods to respond to the difficulty in filling positions: in-house training, 48% of respondents' firms; overtime hours, 47%; subcontractors, 39%; engage with career-building programs, 37%; interns, 35%; executive search firms, 25%; labor suppliers (craft), 24%; staffing firms and professional employer organizations (noncraft), 23%. Less common were use of labor-saving equipment, tools or machinery, 21%; unions, 18%; lean construction, 15%; offsite prefabrication, 13%; or virtual construction methods such as building information modeling, 7%. These percentages also were close to 2015 levels.

Nonfarm payroll employment in August increased by 151,000, seasonally adjusted, from July and by 2,447,000 (1.7%) year-over-year (y/y), the Bureau of Labor Statistics (BLS) reported last Friday. The unemployment rate (4.9%) was unchanged from July. Construction employment (6,640,000) decreased by 6,000 from July, the fourth monthly decline in the past five months, but rose by 199,000 (3.1%) y/y. Residential construction employment (residential building and specialty trade contractors) rose by 10,800 for the month and 132,100 (5.4%) y/y. Nonresidential employment (nonresidential building, specialty trades, and heavy and civil engineering construction) fell by 17,200 for the month but rose by 66,700 (1.7%) y/y. The number of unemployed jobseekers who last worked in construction declined from 525,000 in August 2015 to 454,000, and the unemployment rate for such workers dropped from 6.1% to 5.1%%, the lowest August figures for these series since 2000. (Industry unemployment data are not seasonally adjusted and should only be compared y/y, not across months.) Average hourly earnings rose 2.8% y/y to $28.22, 9.7% above the total private-sector average.

Construction spending totaled $1.153 trillion at a seasonally adjusted annual rate in July, virtually unchanged from the upwardly revised June rate, and up 1.5% year-over-year, the Census Bureau reported last Thursday. The June rate was revised up by $20 billion (1.8%). Combined January-July year-to-date (YTD) spending was 5.6% higher than in the same months of 2015. Public construction tumbled 3.1% for the month but edged up 0.2% YTD. The largest public component, highway and street construction, increased 0.3% for the month and 2.6% YTD. The other major public segment, educational construction, plunged 8.3% for the month but rose 4.0% YTD. Private residential spending gained 0.3% in July and 6.6% YTD. New multifamily construction slid 0.6% for the month but gained 22% YTD; new single-family construction fell 0.2% from June but increased 8.9% YTD; and residential improvements rose 1.5% for the month but slipped 1.7% YTD. Private nonresidential spending gained 1.7% for the month and 8.6% YTD. By subsegment, in descending order of July size, power (electric power plus oil and gas pipelines and field structures) increased 1.1% for the month and 8.3% YTD; manufacturing rose 3.9% in July but fell 2.7% YTD; commercial (retail, warehouse and farm) rose 1.2% and 10%, respectively; office, 4.6% and 27%; and health care, -0.3% and 3.5%.

Construction employment, not seasonally adjusted, increased from July 2015 to July 2016 in 239 (67%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, decreased in 60 (17%) and was stagnant in 59, according to an AGC release and map last week. (BLS combines mining and logging with construction in most metros.) The Denver-Aurora-Lakewood metro area added the most (11,700 combined jobs, 12%), followed by Phoenix-Mesa-Scottsdale (10,700 construction jobs, 11%), Orlando-Kissimmee-Sanford (10,400 construction jobs, 17%) and the Anaheim-Santa Ana-Irvine, Calif. division (9,900 construction jobs, 11%). The largest percentage gains occurred in Boise, Idaho (22%, 4,100 combined jobs); Orlando-Kissimmee-Sanford and Monroe, Mich. (17%, 400 combined jobs). The largest job losses occurred in Louisville/Jefferson County, Ky.-Ind. (-1,900 combined jobs, -6%); New Orleans-Metairie (-1,400 construction jobs, -4%); and Birmingham-Hoover, Ala. (-1,300 construction jobs, -5%). The largest percentage declines again were in Bloomington, Ill. (-16%, -500 combined jobs), followed by Lawton, Okla. (-15%, -300 combined jobs); and Dothan, Ala. (-14%, -400 combined jobs). Construction employment tied or set a new high for July in 37 areas and a new low in 18 areas, based on data back to 2000. (Not-seasonally-adjusted data should not be compared to other months.)

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