Nonresidential Construction Suffers Significant Job Losses

Building Construction Employment Growth: Residential vs. Nonresidential.

Chart courtesy of the Associated Builders and Contractors.

Nonresidential construction suffered significant job losses in April, as national employment declined by 28,300 jobs, according to a May 2 release by the Bureau of Labor Statistics.

Over the 12-month period from April 2007 to April 2008, nonresidential construction employment was down 79,100 jobs, making it the largest year-over-year decline since the period between June 2002 and June 2003.

However, job declines within nonresidential construction were mixed. Industrial building construction employment fell by 1,000 jobs on a monthly basis while commercial building employment increased by 5,900 jobs. Nonresidential specialty trade contractor employment declined by 7,700 jobs in April compared to the previous month.

Total construction employment was down by 61,000 jobs on a monthly basis and down by 385,000 jobs compared to April 2007. The majority of total construction employment declines were in the residential sector, which reported a loss of 33,100 jobs in April compared to March, and 305,700 jobs lost between April 2007 and April 2008.

Total employment was down by 20,000 jobs in April. Though still negative, employment growth was better than many had anticipated. The consensus was that the United States would lose roughly 75,000 jobs in April and that unemployment would rise to 5.2% from 5.1% in March. However, unemployment actually dipped in April to 5.0%.

This employment report, according to Associated Builders and Contractors, provides support for those who believe that the nation will either avoid a recession or that the recession will be short lived and shallow. The unemployment rate continues to be roughly consistent with what is considered to be full employment, and today's overall job report was the best in four months. This may be an indication that the economic weakness traceable to the credit crunch is beginning to dissipate.

Moreover, tax rebate checks have now begun to arrive in consumer accounts, which should help to bolster personal spending during the balance of the second quarter and into the third. However, a certain degree of softness can still be anticipated within the nonresidential construction sector in the short term, based on sector-specific data that continue to arrive, including in the form of suppressed architectural billings.