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AGC Data DIGest: March 29-April 2, 2021

Employment surges in March but quarterly growth slows; spending dives in February; input costs leap

Nonfarm payroll construction employment, seasonally adjusted, rebounded in March with a gain of 110,000 jobs following a weather-induced decline of 56,000 in February, according to AGC’s analysis of Bureau of Labor Statistics (BLS) data posted today However, industry employment gains for the first quarter of 2021 averaged only 22,000 per month, down sharply from the 76,000-job average gain in the second half of 2020. Industry employment totaled 7,466,000, which was 182,000 (-2.4%) below the pre-pandemic peak in February 2020. There is a large gap between residential and nonresidential employment gains Residential construction employment, comprising residential building and residential specialty trade contractors, increased by 37,000 in March, putting the total 49,000 (1.6%) higher than in February 2020. Nonresidential construction employment—building, specialty trades, and heavy and civil engineering construction—rose by 73,000 in March but remained 231,000 (4.9%) below the February 2020 level. A total of 835,000 former construction workers were unemployed in March, up from 658,000 a year earlier and the highest for March since 2014. The industry’s unemployment rate in March was 8.6%, compared to 6.9% in March 2020.


Construction spending in February decreased 0.8% from an upwardly revised January rate but climbed 5.3% from February 2020 to a seasonally adjusted annual rate of $1.52 trillion, the Census Bureau reported on Thursday. Recent results were affected to an unknown degree by generally mild weather in January and extremely severe weather in February, along with cost increases for materials, rather than a pickup in the number of projects. To compensate for the weather vagaries it is useful to compare year-to-date figures for January and February combined in 2020 and 2021. On that basis, total spending increased 4.9% but the disparity widened further between strong residential spending growth and fluctuating nonresidential activity. Private residential construction spending jumped 22% year-to-date, with gains of 25% for new single-family construction, 14% for new multifamily, and 21% for owner-occupied improvements. Private nonresidential construction spending declined 10% year-to-date, with decreases in all 11 components. The largest private nonresidential segment (ranked by January-plus-February spending)—power—slumped 9.5% year-to-date (including electric power, -12%, and oil and gas field structures and pipelines, -2.5%), followed by commercial, -8.4% (including warehouse, 4.1%, and retail, -22%); manufacturing, -12%; and office, -4.7%. Lodging had the largest decrease, -25%. Public construction spending slipped 0.6% year-to-date. The largest public segment, public education construction, slid 1.4% (primary/secondary, 4.5%, and higher education, -13%). Highway and street construction declined 2.3% year-to-date. Public transportation construction fell 1.3%.


Further price increases and supply-chain problems were reported for several construction materials in the past week. On Wednesday, a Utah concrete supplier notified customers that two cement producers have imposed reduced allocations that may affect projects throughout the Midwest and West. On Tuesday, steel supplier Nucor Buildings Group announced it “is implementing a 9.5% price increase (+/-), across all of our brands, effective on all building orders quoted on or after April 8.” A New Mexico plumbing supplier informed customers on March 26 of price increases for plumbing supplies ranging from 3% to 25% scheduled for April 1-5, following similar increases in March and several scheduled for mid-April to June 1. A Texas-based supplier informed customers on March 25, “Last month’s storms impacted three copper rod mills and has attributed to further tightening of finished goods supply….This is expected to be the case for the next 45-60 days, if not longer….Three resin producers are still under force majeure. CDI just published another increase of $0.07/pound with an April increase expected of $0.07/pound. These increases will result in a 20%+ finished goods increase….All PVC pipe/fittings/plastic box manufacturers are under 50-70% allocations. They have started passing allocations on to the market as well. They are still at historically high lead-times.”


Readers are invited to email information about construction costs and supply-chain issues to ken.simonson@agc.org and to register for a webinar on "Soaring Material and Supply-Chain Costs and Delays: What to Expect, How to Cope," on Wednesday, April 14, 3:30-4:30 pm EDT, with Chief Economist Ken Simonson; ConsensusDocs Executive Director Brian Perlberg; and Dan Schnippert, Procurement Director, Marek. Updates will be included in the Construction Inflation Alert that AGC posted on March 26.


BLS on Wednesday posted data on the number of employees and their average (median and mean) hourly wages for more than 800 occupations as of May 2020. For the roughly 40 construction trades occupations, the median was $22.83 per hour, 13% higher than the all-occupations median. (Wages by occupation include workers employed in that trade in any industry, not just construction.)


Construction compensation consultant PAS on Wednesday reported, “The 2020 [construction] executive actual [pay] increase came in at 3.8%....When we factor in the 20% that froze pay, the overall increase number drops to 3.1%. Likewise, 85% of the survey participants anticipated a 2021 executive increase averaging 3.4% (2.9% including zero responses). [The firm’s recent] 2021 Construction/Construction Management Staff Salary Survey [projects] a 3.2% increase for middle managers and professionals in 2021 with only 4% indicating a pay freeze this year.”