by Brianna Crandall — February 21, 2011—The construction unemployment rate jumped to 22.5 percent in January 2011 as the sector lost another 32,000 jobs since December 2010, according to an analysis of new federal employment data released in February by the Associated General Contractors of America. The new data underscores the challenges facing the industry as the stimulus winds down and demand for private and public construction remain weak, association officials noted.
While harsh winter weather likely contributed to some of the industry layoffs in January, the industry has lost 130,000 jobs over the past 12 months even as total private sector employment has increased by nearly 1.3 million, AGC’s chief economist Ken Simonson noted. He added that the fact the construction industry’s unemployment rate continued to be more than twice the overall rate had much more to do with economic conditions than the weather.
The construction economist noted that the industry’s job losses came from the nonresidential construction sector, which lost 35,300 jobs between December and January, while the residential sector added 3,500 jobs. Nonresidential specialty trade contractors were hardest hit, losing 21,000 jobs. Meanwhile, winter weather and stimulus wind-downs likely helped drive down heavy and civil engineering construction employment by 7,000 jobs, Simonson suggested.
In addition, the prices contractors must pay for many essential construction materials continued to increase in January, even as the amount they charge for completed projects remains flat, according to an AGC analysis of January producer price index figures released February 16. Association officials noted that the price trends are cutting into already tight bottom lines for contractors, undermining chances for an industry-wide recovery in 2011.
Prices for materials used in construction jumped 0.9 percent in January and 4.9 percent during the past 12 months, while price indexes for finished buildings barely changed during the same timeframe, the economist noted. He added that construction costs also outstripped the producer price index for finished goods, which rose 0.8 percent during the past month and 3.6 percent since January 2010.
