Contractors keep on hiring and they are spending more on wages for those workers. However, it appears demand is slowing in some sectors.
The construction industry added 25,000 jobs on net in May. This made it one of the leading sectors of private-employment hiring in the U.S. according to the May ADP National Employment Report.
The construction unemployment rate dropped to 3.5% in May. At the same time, unemployment across all industries increased to 3.7% from 3.4% in April. The unemployment rate among jobseekers with construction experience declined to 3.5 percent from 3.8 percent in May 2022, the second lowest May rate in the 23-year history of the data.
Officials with the Associated General Contractors of America said construction firms are boosting pay and taking other steps to recruit workers amid tight labor conditions. Average hourly earnings for production and nonsupervisory employees in construction — covering most onsite craft workers as well as many office workers — jumped by 6% over the year to $34.07 per hour. Construction firms in May provided a wage premium of nearly 19% compared to the average hourly earnings for all private-sector production employees.
“Demand for construction workers remains strong, outside of homebuilding,” said Ken Simonson, the association’s chief economist. “Contractors continue to report their primary challenge is finding qualified workers, not finding projects or most materials.”
Anirban Basu, chief economist for Associated Builders and Contractors, said there will continue to be substantial upward pressure on construction worker compensation during the months ahead. However, the growing amount of economic uncertainty means not all sectors will see growth.
“Based on recent data, simply determining what is happening right now in the economy is difficult,” Basu said. Manufacturing appears to be in its own recession. A number of state economies show evidence of commonplace definitions of recession.
“With credit conditions worsening, interest rates set to remain higher for longer, growing concerns regarding the health of commercial real estate and more consumers struggling to pay monthly bills in an inflationary environment, the onset of economy-wide recession later this year remains a possibility.”
Developer-driven construction activity is especially at risk of a sharp downturn at some point over the next year, he said. That sector already shows signs of slowing. AAGC reports that residential building and specialty trade contractors only grew by 2,500 or 0.1 percent.
Meanwhile, ABC reports that nonresidential construction employment expanded by 22,100 positions on net, with growth in all three subcategories. Heavy and civil engineering added 10,700 positions, while nonresidential specialty trade and nonresidential building added 7,200 and 4,200 jobs, respectively.
