AGCA: Overall Job Creation Remains Sluggish

The construction industry unemployment rate fell to 13.6% in July, from 17.3% in the same year-ago period, according to recently released analysis of federal employment data by the Associated General Contractors of America. The number of unemployed people who previously worked in construction shrank by nearly 400,000 in the same time period, says Ken Simonson, chief economist at AGCA, Arlington, VA. However, the July 2011 employment total of 5,532,000 was only 32,000 higher than in July 2010, he says.

"It is encouraging that the construction industry has added 54,000 jobs, or 1 percent, since hitting bottom last January," Simonson says. "However, unemployed workers are leaving the industry at seven times the rate they are finding jobs in it, which suggests future expansion will be hard to achieve."

New York State breakout statistics from the analysis were not available at press time, but Mike Elmendorf, president and CEO of AGC New York State, says that he would be surprised if they showed any dramatic improvements. "The ups and downs of the national economy, for better or worse, are always magnified in New York for a wide variety of reasons," he says. The state is dramatically affected by the ups and downs of the stock market, and its business climate is much worse than other states with factors such as the second-highest cost of doing business in the country (behind Hawaii) and high business taxes, Elmendorf says.

Nationally, employment in heavy and civil engineering construction — which previously added jobs as a result of federal stimulus spending, military base realignment and Gulf Coast hurricane protection projects — grew 2.5% year over year to 21,000 jobs last month, Simonson says. Residential building and specialty trade employment combined lost 11,700 jobs, or 0.6%, over the past 12 months, while nonresidential building and specialty trade contractors added a combined 22,400 jobs, or 0.9%.

"The shift in employment from heavy projects such as highways, military bases and levees to factories, power projects and hospitals will continue as government spending shrinks and the private sector gradually expands," Simonson says. "But overall job creation will remain sluggish at best unless single-family homebuilding also revives."