Contractors laid off 110,000 more workers in April. This matches the average monthly layoffs over the last six months. Contractors have shed 1,370,000 jobs in the last three years. Not surprisingly, previously very strong construction wage growth has ended. Stimulus funded construction jobs were trivial during the jobs survey week a month ago. 7,500 job cuts at Building Supply Centers confirm that contractor and DIY remodeling is still shrinking. 13,500 job cuts at architectural/engineering firms confirm that the stimulus construction program has not yet pushed a significant number of projects into the design phase. 17,200 layoffs by heavy general contractors confirm that the stimulus impact through April remains very small in the sector expected to get the earliest and biggest boost from stimulus funds.

Construction Employment, 000s
Change from prior quarter

Source: US Dept. of Labor
Forecast: Reed Construction Data

The May jobs survey is being taken this week. The number of stimulus funded jobs will be larger than in April. But there may not be enough added stimulus jobs to offset the continued shrinking in construction activity funded from the usual sources. Credit access is restraining both residential and nonresidential development work. This is not a shortage of lendable funds. Lenders are balking at giving credit to developers and contractors whose balance sheets have deteriorated over the recession and whose near term cash flow prospects continue to worsen with falling home prices and commercial rental income.

Similarly, heavy contractors are not getting some expected work funded by private companies and state and local government funds. Private transit and power facilities now have surplus capacity which is likely to persist through next year. All of the state and local funding sources are shrinking rapidly. This includes boned funds, legislative appropriations from tax receipts, fuel tax collections and investment earnings. Construction money available from each of these funding sources will continue to shrink well into 2010 and into 2011 in some regions.

Hence, the construction jobs outlook is grim. Job cuts are expected to be at recent high levels in May and then ebb very slowly through next winter. Net hiring will resume about a year ahead. The current 18% unemployment for construction workers will push over 20% before significant work on stimulus projects and hiring by homebuilders begin late this year.