This is a post from Jim Haughey's blog that covers the US construction industry.

Jim Haughey is the Chief Economist for Reed Construction Data and has over thirty years experience as a business economist, including twenty years monitoring the construction market. He has a Ph.D. degree in economics from the University of Michigan and has previously taught at the University of Michigan, Ohio University, Michigan State University and the University of Massachusetts.

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Construction Industry Forecasts

Notes from Jim Haughey - May 06, 2011

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Contractors hire 5,000 workers in April
Jim Haughey, RCD Chief Economist

Construction hours worked increased 0.4% in April, better than a 5% annual growth pace and much higher than current overall economic growth.  Average hourly earnings in construction rose 0.3% which is also much faster than wage gains in the overall economy. This is biased higher by the tilting of the work mix to heavy construction where wages are higher. While construction wages have begun to rise, the gains will be modest because of the huge reserve of employed workers.

Overall, US employers added 244,000 jobs in April and March employment was revised up by 46,000 jobs. This was a surprise. The expectation was 150,000 jobs. The expectation had been soured by a projection from ADP and rising jobless claims in the last few weeks. The estimate by the payroll processing firm apparently missed much of the nearly 100,000 new jobs at retail stores and restaurants.  And the rise in unemployment insurance claims came after the April payroll survey week. This raises the risk that May job gains may be lower and that April job gains may be revised down.  Nonetheless, the hiring surge is sustainable and will continue to average above 130,000 per month which is the threshold for reducing the number of unemployed people.

The mix of job gains was bizarre. Manufacturers added 29,000 jobs.  This is extremely strong in an economic environment of at best 3% GDP growth and 6% gains in manufacturing labor productivity.  Manufacturing jobs would typically be cut in this environment. The next few months will bring some manufacturing layoffs due to Japanese parts shortages.

Wholesaling, transportation and warehousing together added 11,000 jobs, a big decline from earlier in the year. This slowdown hints at a weaker hiring environment in the next few months.  2,000 fewer temporary workers were employed in April.  This could be the result of temps becoming permanent workers which would be positive for the hiring outlook. But it is more likely due to employers’ concern about the pace of sales gains in the next few months.

Government employment was cut by a further 24,000 in April with most of the cuts at the state and local government level. These budget balancing layoffs are not yet over and may extend into next year. State tax revenues have been expanding for a year but are still very depressed. Local property tax revenues are just beginning to recover but state and federal aid to local governments continues to decline.

 


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Read Other Recent Jim Haughey Posts

08/15 - Contractor Survey: Work backlog rises in 2nd Q but may fall in the summer
08/09 - Modest construction recovery will be supported by two more years of cheap credit
07/29 - Sour economic growth report threatens construction recovery
07/27 - Worry about the deficit not the debt limit
07/27 - Worry about the deficit not the debt limit
07/27 - Worry about the deficit not the debt limit
07/19 - Housing starts rebound.6% in June after two weak months
07/18 - Congress prepares to postpone resolving the deficit crisis assuring an extended period of subpar eco
07/12 - House Transportation Committee proposes to keep federal highway funding at fuel tax receipt level
07/09 - Don’t count on debt limit deal to restart sustained high economic growth
07/08 - Contractors cut 9,000 jobs in June
07/05 - The cost and frustration of selling a home contributes to the delayed housing recovery
07/05 - May construction spending down 0.6%; recovery still on hold
07/01 - FAA stops works on federally funded runway and control tower projects
06/21 - It is not more jobs that will quicken the economic recovery
06/16 - Mays’ 3.5% gain in housing starts does not signal a housing recovery immediately ahead
06/15 - Cautious spending threatens to delay construction recovery
06/10 - Economic and construction recoveries will be subpar for at least another year
06/09 - NYC construction unions may agree to drop expensive work rules to spur more work
06/04 - Contractors add 2,000 jobs in May; overall job gain disappointingly low

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