Construction Industry Forecasts

The August construction job count is nearly identical to March of this year. All of the differences in monthly job counts net out to -1,000 jobs over the last five months.  “No change” was the expected trend over this period.  When there is no trend, either up or down, the unavoidable statistical noise seems large and can be misleading. Interpret the construction labor market as signaling that the construction recession is over but that the recovery has not yet begun.

The August jobs report was weak but still positive for the overall economy.  Private employers hired 67,000 workers, 40,000 less than in July, 114,00 temporary Census 2010 workers were laid off, state and local governments dropped 10,000 people and the federal government hired 3,000 people. The job details present a mixed picture of economic prospects. The state and municipal job cuts will be a drag on the rest of the economy for next year. The recent $26 Billion grant from Congress to selected recession weaken states is not enough to reverse this trend.  The decline in private hiring confirms that the summer economic slowdown is real although not as bad as some feared. Manufacturers cut 27,000 jobs.

6,000 were in machinery and equipment markets consistent with an earlier drop in equipment orders. This is likely a quick adjustment to reduced orders during the weak period in the economy and not a trend reversal. Motor vehicle manufacturers dropped 21,000 jobs. The job count in this industry is very volatile.  But 21,000 is a big cut, especially since GM skipped much of the usual August shutdowns for model year change machinery changeovers. Offsetting this sour note, temporary help services hired 17,000 people after no net hiring in July.