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Overall Spending and Job Gains Should Continue in 2013, Association Economist Predicts But Officials Warn That Public Investment Cutbacks May Undermine Recovery

Revised government data issued today show the construction industry is contributing substantially to economic and employment growth, according to an analysis by the Associated General Contractors of America. Association officials noted that construction employment rose for the eighth consecutive month in January, while construction spending in December increased for the ninth month in a row. Both totals were the highest levels in more than three years.

“The new employment data show the industry lost even more jobs in the recession than previously estimated but has added almost 300,000 jobs in the past two years, including nearly 100,000 since September,” said Ken Simonson, the association's chief economist. “Meanwhile, the steady rise in construction spending since last March suggests contractors will be hiring even more workers in the months ahead.”

Construction firms employed 5.731 million people in January, a gain of 28,000 from December and 102,000 or 1.8 percent from a year ago, Simonson noted. The industry unemployment rate, which is not seasonally adjusted and thus is typically high in January, fell from 17.7 percent in January 2012 to 16.1 percent last month.

Both residential and nonresidential construction added jobs for the month and year. Residential construction — building and specialty trade contractors — added 14,500 jobs in January and 53,200 (2.6 percent) over 12 months. Nonresidential construction — building, specialty trade and heavy and civil engineering firms — expanded by 13,700 employees in January and 48,900 (1.4 percent) over the year-ago level.

Construction put in place totaled $885 billion in December, the most since September 2009 and a pickup of 0.9 percent from November and 7.8 percent compared with December 2011. Private residential construction spending jumped 2.2 percent for the month and 24 percent year-over-year. Private nonresidential spending grew 1.8 percent and 7.6 percent, respectively. These increases more than offset a plunge in public construction spending of 2.6 percent for the month and 17 percent over 12 months.

“We are likely to see continued strong growth in single- and multifamily homebuilding, moderate increases in private nonresidential construction and shrinking public investment levels for the next several months,” Simonson said. “Those trends, in turn, will lead to a steady increase in the number of construction jobs.”

Association officials said the rosy outlook could be undermined if public officials do not begin to increase investment in construction. They urged Congress to avoid an abrupt slowdown in federal funding that would occur if an across-the-board spending sequestration or a government shutdown occurs in March.

“Instead of making short-sighted cuts in programs to provide flood protection and clean water systems, Washington officials need to find a way to address out-of-control entitlement spending,” said Stephen E. Sandherr, the association’s chief executive officer. “And we must continue to give the private sector the kind of stability and certainty it needs to thrive.”