Construction Data is Encouraging
The month of May brought encouraging numbers for the construction industry. Forty-Two States added construction jobs over the previous May. In the month of May alone, California added the greatest number of jobs, 6,500, a nearly one percent increase from the previous month. 1.
According to AGC (the Associated General Contractors of America), construction added 25,000 jobs in total for the month of May bringing unemployment to its second-lowest level in the month. Most of that increase, 22,100 workers, was in nonresidential construction. For the previous 12 months, 192,000 jobs were added in total, equalling a two-and-a-half percent increase.
“Contractors remain busy nationwide, with bulging order books for future work,” said Ken Simonson, the association’s chief economist. “But they are having trouble filling job openings when the industry unemployment rate is only 3.5 percent. That probably accounts for the recent lack of job gains in many states.” 1.
Labor costs continued to rise.
“Average hourly earnings for production and nonsupervisory employees in construction—covering most onsite craft workers as well as many office workers—jumped by 6.0 percent over the year to $34.07 per hour. Construction firms in May provided a wage “premium” of nearly 19 percent compared to the average hourly earnings for all private-sector production employees.” 3.
Hourly wages for nonsupervisory employees, including craft and office workers, jumped 6% from the year earlier to $34.07 per hour.
The worker shortage has meant employers have had to increase pay to attract good employees. The industry lost a large number of workers to retirement in recent years and there are not enough young people who have been encouraged to consider jobs in construction.
Meanwhile, Input Costs Decline
Supply chain problems and material cost increases have hammered the industry for three years but finally, there appears to be at least some relief. Services and materials used in nonresidential construction decreased by 0.6 percent from April to May. Meanwhile, bid prices for contractors, which have been flat since January, crept up one-tenth of a percent, giving more breathing room for contractor’s margins. 
There are still areas of concern in the cost of materials and there could be more challenges coming as the federal Buy America mandates will likely lead to future price increases.
“Prices for most major construction inputs were stable or declined in May. But the index for steel mill products jumped 5.2 percent, following a 3.6 percent increase in April. The index for concrete products rose for the 30th month in a row, by 0.8 percent, producing a year-over-year increase of 12.5 percent.” 2.
The AGC is concerned that the Buy America requirements that were passed in the bipartisan infrastructure bill will significantly limit the available supplies contractors are allowed to use. Many products made in the U.S. will not qualify because they use materials that are sourced from overseas.
1. https://www.agc.org/1
2. https://www.agc.org/2
2. https://www.agc.org/3
