Construction employment added 34,000 jobs on net in August, according to Associated Builders and Contractors. On a year-over-year basis, the industry has expanded by 228,000 jobs—an increase of 2.8%.
The construction unemployment rate fell from 3.9% in July to 3.2% in August. The national unemployment rate for all industries decreased from 4.3% in July to 4.2% in August as the U.S. economy added 142,000 jobs.
Nonresidential construction added 28,300 jobs in August, with growth in all three subsectors. Nonresidential specialty trade contractors added 14,000 jobs; heavy and civil engineering added 13,500 jobs; and nonresidential building added 800 jobs.
“August’s employment report is perfectly consistent with the notion of a soft landing,” said ABC Chief Economist Anirban Basu. “Unemployment fell economywide and in the nation’s construction sector. Job growth in nonresidential construction was both brisk and broad-based. Moreover, Federal Reserve officials continue to indicate that they are ready to reduce interest rates, which is expected within the next two weeks.
“And yet, the level of concern has been rising among contractors,” Basu continued. “According to both ABC’s Construction Confidence Index and Construction Backlog Indicator, the outlook among contractors is dimming gradually. Many projects have been postponed recently in the context of still-elevated borrowing costs and tighter lending conditions."
Basu said although there are indications interest rates are falling, they may not drop as quickly as many contractors hope.
“The economy remains too strong to warrant rapid declines in interest rates implemented by the Federal Reserve,” Basu said. “Moreover, average hourly earnings expanded more rapidly in August than anticipated, suggesting that inflation remains sticky and that Fed officials may only be able to reduce rates gingerly.”
