All-Time Low Jobs, Spending Hit Construction Despite Economic Growth
The construction industry remains in recession as sector employment and spending drop despite overall economic growth.
Though construction employment eased off by 1,000 jobs in March, the industry’s unemployment rate of 20.7 percent (not seasonally adjusted) was still bad news because it more than doubled the overall rate and was the highest of any industry.
On the other hand, construction spending stumbled again in February, dropping 1.4% for the month and marking an 11-year low of 6.8% for the past twelve months, the lowest since October 1999.
“The ongoing drop in construction employment in March, combined with the news that construction spending hit an 11-year low in February is doubly distressing,” said Ken Simonson, chief economist of the Associated General Contractors of America (AGC).
AGC also cautioned that the declining totals for construction jobs and spending, together with rising materials cost threaten to limit higher economic growth. The recession discouraged demand for commercial centers and urged banks to tighten credit, further deepening the construction problems and making project financing more difficult for builders.
There are signs of upturn but it still isn’t the end of the recession. Simonson added that “Despite few signs of an upturn, the industry as a whole has yet to touch the bottom five full years after the peak in employment and spending.”
Fears of a double-dip recession are increasing as Hewes and Associates analysts remarked that the industry would not return to growth until 2014.
AGC officials are citing these as evidences of the need for measures to boost public and private construction demands to support broader economic growth.