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AGC's Data DIGest: Dec 24, 2020-Jan. 8, 2021

Construction adds jobs in December but AGC survey finds contractors pessimistic about 2021 outlook

Nonfarm payroll construction employment, seasonally adjusted, increased in December by 51,000 to a total of 7,413,000, the Bureau of Labor Statistics (BLS) reported today. However, the total was down 142,000 (-1.9%) year-over-year (y/y) and down 226,000 (-3.0%) from the pre-pandemic peak in February. There was a gain of 22,700 last month in residential construction employment, comprising residential building (8,900) and residential specialty trade contractors (13,800). There was an increase of 29,000 in nonresidential construction employment, covering nonresidential building (-4,300), specialty trades (18,300), and heavy and civil engineering construction (15,000). There were similar employment declines between February and April in residential construction (-15%) and nonresidential construction by (-13%) but a growing disparity since then. From April to December residential construction increased 19% and recovered all (103%) of the employment lost from February to April. Nonresidential employment increased 9.5% and recouped only 61% of lost jobs. The industry’s unemployment rate in December was 9.6%, not seasonally adjusted, with 930,000 former construction workers idled, nearly double the year-earlier 5.0% rate and 489,000 workers, respectively.

Contractors are generally pessimistic about the outlook for nonresidential and multifamily construction in 2021, based on the 2021 AGC-Sage Construction Hiring and Business Outlook Survey, which AGC released on Thursday. The survey included 1,329 responses submitted November 11-December 11 from every state, the District of Columbia, and Puerto Rico. Respondents were asked whether the dollar value of projects they compete for would be higher or lower in 2021. The net reading (the percent of respondents expecting a higher dollar value less the percent expecting a lower amount) was negative for 13 out of 16 project types. The only positive net readings were for healthcare other than hospitals (e.g., clinics, testing/screening facilities, medical labs), with an 11% net positive; warehouse, 4%; and water/sewer, 1%. Contractors were most negative about retail construction (-64% net reading), followed by lodging and private office (-58% each), higher education (-40%) and public building (-38%). Only 25% of respondents reported winning new or expanded projects as a result of the pandemic, while 78% reported at least one project had been postponed or canceled. Breakouts of the answers by respondents in 25 states, the four Census regions, and by union/open-shop showed broad similarity on new or canceled projects but differences in expectations. For instance, net readings for all 16 segments were higher than the national average among respondents in the South and lower in the Northeast. About one-third (35%) of firms nationally expect to increase headcount in 2021, compared to 76% in the 2020 survey, while 24% expect to reduce headcount, compared to 5% a year ago.

Construction spending in November increased 0.9% from October and 3.8% from November 2019 to a seasonally adjusted annual rate of $1.459 trillion, the Census Bureau reported on Monday. The disparity widened between residential spending growth and flat or declining nonresidential activity. Private residential construction spending rose 2.7% for the month and 11% from February to November, with nine-month gains of 9.6% for new single-family construction, 11% for new multifamily, and 13% for owner-occupied improvements. Private nonresidential construction spending declined for the fifth consecutive month, by 0.8% since October and 8.5% since February. The largest private nonresidential segment (ranked by November spending)—power—slumped 10% over nine months (including electric power, -14%, and oil and gas field structures and pipelines, -1.0%), followed by commercial, -3.0% (including warehouse, 5.5%, and retail, -12%); manufacturing, -9.3%; and office, -3.9%. Public construction spending slipped 0.2% for the month and 1.4% over nine months. The largest public segment, highway and street construction, declined 5.6% since February. Public education construction fell 2.5% (primary/secondary, 3.7%, and higher education, -14%). Lodging had the largest nine-month decrease, -23%.

Construction employment, not seasonally adjusted, decreased between November 2019 and November 2020 in 203 (57%) of the 358 metro areas (including divisions of larger metros) for which BLS posts construction employment data, increased in 122 (34%) and was unchanged in 33, according to an analysis AGC released on Tuesday. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers; AGC assumes the construction-only percentage change in these metros equals the combined change.) The largest losses occurred again in Houston-The Woodlands-Sugar Land (-22,500 construction jobs, -9%) and New York City (-16,700 combined jobs, -11%), followed by Midland, Texas (-9,800 combined jobs, -25%); the Montgomery-Bucks-Chester Counties, Pa. division (-8,800 combined jobs, -16%); and the Newark, N.J.-Pa. division (-8,400 combined jobs, -11%). The steepest percentage loss again occurred in the Brockton-Bridgewater-Easton, Mass. division (-40%, -2,200 combined jobs), followed by Altoona, Pa. (-35%, -1,100 combined jobs); Bloomsburg-Berwick, Pa. (-31%, -400 combined jobs); Johnstown, Pa. (-31%, -800 combined jobs); and East Stroudsburg, Pa. (-30%, -400 combined jobs). Phoenix-Mesa-Scottsdale added the most jobs over the year (4,700 construction jobs, 3%), followed by Baltimore-Columbia-Towson (4,500 combined jobs, 5%); Boise, Idaho (4,300 combined jobs, 16%); the Dallas-Plano-Irving division (3,700 combined jobs, 2%) and the Seattle-Bellevue-Everett division (3,600 construction jobs, 3%). Walla Walla, Wash. again had the largest percentage gain (17%, 200 combined jobs), followed by Boise; Springfield, Mo. (16%, 1,500 construction jobs); and Oshkosh-Neenah, Wisc. (16%, 900 combined jobs).

The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at www.agc.org/datadigest.