Construction Employment Declines in Majority of Cities

Construction employment declined in 324 out of 337 metropolitan areas over the past year as spending on construction projects dropped by over $137 billion in November to a 6-year low of $900 billion, according to a new analysis by the Associated General Contractors of America of federal figures released today.

“Private nonresidential construction is in freefall, with every category except private power construction down sharply compared to a year ago,” said Ken Simonson, the association’s chief economist.

“Those cuts are causing layoffs in virtually every part of the country for tens of thousands of skilled construction workers.” Simonson noted new Census Bureau figures released today show developer-financed construction suffered the largest decline in spending between November 2008 and November 2009. He added that private lodging investments were down 46%; retail, warehouse and farm spending were down 41% and private office construction investments were down 39%.

A recovery in homebuilding may spark some improvement in retail construction later this year, and higher education and hospital construction may come back in the second half of 2010, the economist suggested. Simonson noted that public construction benefitted from federal stimulus funds, with a year-over-year increase of 2.7%. He predicted, however, those gains will continue to be tempered by sharp cutbacks in projects funded directly by states, local governments and school systems. Simonson said the declines in investments were leading to sweeping industry layoffs. El Centro, Calif., lost a larger percentage of its construction work force (36%) from November 2008 to November 2009 than any other metropolitan area according to the latest Bureau of Labor Statistics figures. The agency includes mining and logging with construction in most metro areas to prevent disclosure about industries with few employees, Simonson noted.

Other areas experiencing sharp declines in construction employment during the year include Kokomo, Ind. (31%); Wenatchee-East Wenatchee, Wash. and Reno, Nev. (both 28%); and St. George, Utah and Grand Junction, Colo. (both 27%). Of the six metropolitan areas with an increase in construction employment during the past 12 months, only two areas had gains of more than 100 jobs: Harrisburg-Carlisle, Pa. (1,500 jobs, 12% gain) and Tulsa, Okla. (700 jobs, 3% gain.) Four metro areas had gains of 100 jobs each in construction: Anderson, Ind. (6%); Columbus, Ind. (5 percent); Bismarck, N.D. (3 percent) and Fargo, N.D., including nearby areas in Minnesota (1%).

THE JANUARY 2010 ISSUE of ContractingBusiness.com will feature exclusive forecasts by Ken Simonson on the residential and commercial construction markets.