Construction Shows Robust Gains
The Construction Industry has faced a litany of challenges with the pandemic, supply chain, and labor issues. However recent activity from new starts and employment increases have brought numbers in line with their pre-pandemic levels.
Year-to-date nonresidential starts were up almost 40%. In the last 12 months, total construction starts were up 16% over the full year ending February 2021. Breaking that down further, residential starts were up 19%, and nonresidential starts up 23%.*
It is interesting to note that if three large manufacturing projects were taken out of the overall numbers, total construction actually fell slightly to 6% from the year-earlier according to Dodge Construction Network.
“The manufacturing sector has been an important success story for construction since the pandemic began,” stated Richard Branch, chief economist for Dodge Construction Network. “Domestic producers are expected to seek more control over their supply chains in the future, so that aspect of construction should continue to flourish. However, as evident in February’s data, other sectors are struggling to gain traction in the face of high material prices and worker shortages. The conflict in Ukraine will continue to put upward pressure on costs, making the sector’s recovery more tenuous in 2022.”
In February the industry added 60,000 jobs according to the Associated Builders and Contractors (ABC) analysis of numbers released by the U.S. Bureau of Labor Statistics. Over the last year, nonresidential employment was up almost 4% and residential was up 4.5%.
ABC Chief Economist Anirban Basu. “At the heart of America’s economic momentum is rapid workforce growth, with more people re-entering the workforce to take advantage of higher wages and to better contend with rapidly rising prices.”
“Evidence indicates that contractors have had a somewhat easier time filling available positions recently,” said Basu. “There are also indications that supply chain issues have improved slightly, though the Ukraine/Russia war may create new issues on that front. With demand strong and the supply side of the economy in repair, 2022 is setting up to be a strong year for contractors.”**
March continued to build on the employment front by adding another 19,000 jobs. Total industry employment in March topped the pre-pandemic peak set in February 2020 by over 5%.
Despite the robust employment numbers, there’s still a strong need for workers and many positions have yet to be filled. Job openings at the end of February broke a 22-year record for that month, totaling 364,000. The number of workers hired was 342,000. That means that contractors wanted to hire about twice the 19,000 workers they were able to find.
According to the Associated General Contractors of America, the Federal Government has a role to play as well:
Association officials said the industry will need to obtain materials on a more timely basis and hire hundreds of thousands of additional workers in order to execute projects that will soon be funded by the Bipartisan Infrastructure law, on top of the continuing demand for homebuilding and private nonresidential structures. Officials urged Congress and the Biden administration to end lumber, steel, and other tariffs, increase funds for career and technical education, and support a wider range of apprenticeship and training opportunities.