Construction sector contributes to August jobs boost

The construction industry added 22,000 jobs in August, according to United States data analyzed by the Arlington, Virginia-based Associated General Contractors of America (AGC). The sector’s payroll growth represented more than 11.7 percent of an overall U.S. employment growth figure of about 187,000 for August.

AGC now pegs overall U.S. construction employment at nearly 8 million people, with the trade group saying employers have boosted pay to an average of $34.40 per hour “as they try to attract a limited pool of qualified workers." The sector’s unemployment rate stands at 3.9 percent.

According to AGC, total U.S. construction spending rose 0.7 percent in July, despite what it says is a downturn in most infrastructure investment categories.

“Today’s reports show there is no letup in demand for construction workers or private-sector projects,” AGC chief economist Ken Simonson says. “The industry is raising pay faster than other sectors amid persistently low unemployment.

“Contractors are frustrated by the slow pace of new public project awards.”

Construction employment in the U.S. has risen by 212,000 payroll jobs, or 2.7 percent, from a year earlier. AGC says that rate outpaced total nonfarm job growth of 2.0 percent over the same 12 months.

Nonresidential construction firms—nonresidential building and specialty trade contractors along with heavy and civil engineering construction firms—added 21,000 employees for the month and 169,700 (3.7 percent) since July 2022. Employment at residential building and specialty trade contractors grew by 1,400 last month and 42,400 jobs (just 1.3 percent) during the past 12 months.

Construction spending in July totaled $1.97 trillion at a seasonally adjusted annual rate, an increase of 0.7 percent from June and 5.5 percent from July 2022. Private residential spending climbed 1.4 percent for the month, while private nonresidential spending rose 0.5 percent.

However, public construction spending slid 0.4 percent as the largest infrastructure categories declined from June. Highway and street construction spending fell by 0.6 percent, transportation by 0.9 percent, and sewage and waste disposal by 1.2 percent, according to AGC.

AGC says public construction activity has been hampered by new regulatory measures that are causing confusion and slowing approvals on projects. Specifically, the trade group points to a new rule defining what constitutes “a water of the U.S.” and others that seek to apply federal wage rates to projects funded by the Inflation Reduction Act.

A combination of economists and institutional investors have been predicting an imminent recession in the U.S. throughout the year, pointing to factors including inflation, geopolitical turmoil and the demographic-related issues causing AGC to refer to the labor pool as “limited.”

Referring to the 187,000 net job gain in August, the Associated Press refers to that figure as “evidence of a slowing but still-resilient labor market despite the high interest rates the Federal Reserve has imposed.”

On the inflation front, the AP says the U.S. government’s August jobs report demonstrated wage gains seem to be easing, with average hourly wages rising 0.2 percent from July to August, although they rose by 4.3 percent from August 2022 to this August.