Construction employment declined for the third time in the past four months in May as nonresidential contractors coped with lengthening and unpredictable delivery times that limited their ability to start or complete projects, according to an analysis by the Associated General Contractors of America of government data released today. Association officials added that many contractors report they are having a hard time finding qualified workers to hire as some people remain reluctant to return to work while their children are learning from home, or they are collecting elevated unemployment supplements.
“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, the association’s chief economist. “If they can’t get the materials, they can’t put employees to work.”
Seasonally adjusted construction employment in May totaled 7,423,000, a drop of 20,000 from the downwardly revised April total. Industry employment declined as well in April and February. The total in May remained 225,000 less than in February 2020, the high point before the pandemic drove construction employment down by more than a million jobs.
The gap widened in May between residential construction, which has experienced feverish demand for new and remodeled housing, and nonresidential construction, which has been declining, aside from a few niches. Residential construction firms—contractors working on new housing, additions, and remodeling—gained 1,900 employees during the month and employed 35,000 more workers (1.2%) in May than in the pre-pandemic peak month of February 2020. In contrast, the nonresidential sector—comprising nonresidential building, specialty trades, and heavy and civil engineering contractors—shed 21,800 jobs in May and employed 260,000 fewer workers or 5.6% less than in February 2020.
“Contractors are being told they must wait nearly a year to receive shipments of steel and 4-6 months for roofing materials,” Simonson noted. “These delays make it impossible to start some projects and to complete others, leaving contractors unable to keep workers employed. In addition, soaring prices for steel, lumber, and other materials are deterring owners from committing to going ahead with projects.”
Association officials urged Congress and the Biden administration to take steps to address the record materials price increases and supply chain bottlenecks. They said the President should end tariffs on key materials like lumber, steel, and aluminum. They added that Washington officials should look at ways to ease manufacturing and shipping backups. And they urged Congress to allow unemployment supplements to expire, as planned, after Labor Day.
“The decline in construction employment is likely less about a lack of demand as it is about the challenges contractors are facing in meeting that demand,” said Stephen E. Sandherr, the association’s chief executive officer. “Supply-chain problems and labor shortages are holding back what should otherwise be a much stronger recovery for the construction sector.”
Related Stories
Market Data | Nov 4, 2019
Nonresidential construction spending rebounds slightly in September
Private nonresidential spending fell 0.3% on a monthly basis and is down 5.7% compared to the same time last year.
Market Data | Nov 1, 2019
GDP growth expands despite reduction in nonresident investment
The annual rate for nonresidential fixed investment in structures declined 15.3% in the third quarter.
Market Data | Oct 24, 2019
Architecture Billings Index downturn moderates as challenging conditions continue
The Architecture Billings Index (ABI) score in September is 49.7.
Market Data | Oct 23, 2019
ABC’s Construction Backlog Indicator rebounds in August
The primary issue for most contractors is not a lack of demand, but an ongoing and worsening shortage of skilled workers available to meet contractual requirements.
Multifamily Housing | Oct 16, 2019
A new study wonders how many retiring adults will be able to afford housing
Harvard’s Joint Center for Housing Studies focuses on growing income disparities among people 50 or older.
Market Data | Oct 9, 2019
Two ULI reports foresee a solid real estate market through 2021
Market watchers, though, caution about a “surfeit” of investment creating a bubble.
Market Data | Oct 4, 2019
Global construction output growth will decline to 2.7% in 2019
It will be the slowest pace of growth in a decade, according to GlobalData.
Market Data | Oct 2, 2019
Spending on nonresidential construction takes a step back in August
Office, healthcare, and public safety are among the fastest-growing sectors, according to the U.S. Census Bureau's latest report.
Market Data | Sep 27, 2019
The global hotel construction pipeline ascends to new record highs
With the exception of Latin America, all regions of the globe either continued to set record high pipeline counts or have already settled into topping-out formations amidst concerns of a worldwide economic slowdown.
Market Data | Sep 25, 2019
Senate introduces The School Safety Clearinghouse Act
Legislation would create a federally funded and housed informational resource on safer school designs.