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AGC's Data DIGest: January 2-5, 2024

AGC survey finds contractors cautiously optimistic about 2024; sector adds employees in December

Contractors are generally optimistic about the outlook for nonresidential and multifamily construction in 2024, but optimism is less widespread than a year ago, based on the 2024 AGC-Sage Construction Hiring and Business Outlook Survey, which AGC released on Thursday. The survey included 1,293 responses submitted November 9-December 8. Respondents were asked whether the dollar value of projects they compete for would be higher or lower in 2024. The net reading (the percent of respondents expecting a higher dollar value less the percent expecting a lower value) was positive for 14 out of 17 project types. The broadest optimism was for water and sewer projects, with a net positive reading of 32 percentage points, followed by highway and bridge projects and transportation facilities, 30 each; federal agency work, 37; power, 25; hospital, 23; other health care (such as clinics, labs, and testing facilities), 22; data centers 20; K-12 schools, 18; higher education, manufacturing, and public building construction, 15 each; warehouse, 10; and multifamily, 4. Net readings were negative for lodging, -3; retail, -15, and office, -24. As in 2023, 69% of firms expect to add employees. But 55% of respondents expect doing so will be as hard or harder than in 2023.

Construction employment, seasonally adjusted, totaled 8,056,000 in December, a gain of 17,000 from November and 197,000 (2.5%) year-over-year (y/y), according to AGC’s analysis of data the Bureau of Labor Statistics (BLS) posted today. The y/y growth rate outpaced the 1.7% increase in total nonfarm payroll employment. Residential construction employment (at residential building and specialty contractors) rose by 5,500 in November and 40,100 (1.2%) y/y. Nonresidential construction employment (at building, specialty trade, and heavy and civil engineering construction firms) increased by for the month and 11,900 (3.4%) y/y. Seasonally adjusted average hourly earnings for production and nonsupervisory employees in construction (craft and office) rose 5.1% y/y to $34.92 per hour. This “wage premium” for nonsupervisory construction workers amounted to 18.7% over the private sector average of $29.42, still considerably below the average premium in 2000-2019 of 21.5%. There were 442,000 unemployed jobseekers with construction experience, not seasonally adjusted, and the unemployment rate for such workers was 4.4%, unchanged from a year ago.   

Construction spending (not adjusted for inflation) totaled $2.05 trillion in November at a seasonally adjusted annual rate, up 0.4% from the upwardly revised October rate and up 8.5% y/y, the Census Bureau reported on Tuesday. However, without a deflator, it is impossible to say how much of the y/y gain is in units vs. price. Private residential construction decreased for the seventh-straight month, by 1.1%, with single-family homebuilding up 2.9%, multifamily construction spending up 0.1%, and owner-occupied improvements down 0.8%. Private nonresidential construction spending rose 0.2%. The largest private nonresidential segment—manufacturing construction—rose 0.5% (including computer/electronic/electrical, up 3.2%, and chemical and pharmaceutical, down 2.0%). Commercial construction was flat (consisting of warehouse, down 4.6%; retail, up 0.1%; and farm, up 4.6%). Power rose 1.2% (with electric power up 0.6% and oil and gas field structures and pipelines up 1.5%). Private office and data center construction was flat. Public construction spending fell 2.2, with highway and street construction up 0.1% and public education down 0.3%.

There were 390,000 job openings in construction, not seasonally adjusted, at the end of November, an increase of 121,000 (38%) y/y and the largest November total in the 23-year history of the data, the BLS reported on Wednesday. Openings topped the 271,000 hires during the entire month, suggesting contractors wanted to hire twice as many workers.

Construction employment, not seasonally adjusted, rose y/y from November 2022 in 213 (59%) of the 358 metro areas (including divisions of larger metros) for which BLS posts construction employment data, fell in 81 (23%), and was unchanged in 64, according to an analysis AGC released on Wednesday. (AGC treats as construction-only the totals for metros in which BLS reports only combined totals for mining, logging, and construction.) The Dallas-Plano-Irving division added the most jobs (12,500 combined jobs, 7%), followed by New York City (9,900 combined jobs, 7%). The largest percentage gain again occurred in Baton Rouge, La. (9,400 construction jobs, 19%), followed by Tulsa, Okla. (16%, 4,000 construction jobs). The largest number and percentage of losses occurred in the Orange-Rockland-Westchester, N.Y. division (-5,100 combined jobs, -11%).

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