Nonfarm payroll employment skidded 524,000, seasonally adjusted, in December and 2.6 million (-1.9%) over 2008 as a whole, the Bureau of Labor Statistics (BLS) reported on Friday. Construction accounted for 101,000 lost jobs (almost one-fifth of the monthly total) in December and 632,000 (-8.5%) for the year (nearly one-fourth of the annual loss), although the industry makes up only 5% of total payroll employment (6.8 million out of 135.5 million in December). Losses occurred in all five BLS construction job categories: residential building, -16% for the year; residential specialty trade contractors, -11%; nonresidential building, -7%; nonresidential trades, -5%; and heavy and civil engineering, -9%. Architectural and engineering services, a harbinger of future construction demand, fell 1.4% for the year. Average hourly earnings of production and nonsupervisory workers rose 66 cents (3.7%) for the private nonfarm sector and $1.07 (5.1%) in construction, to $22.37, seasonally adjusted, in December. The unemployment rate over the year rose from 4.8% to 7.1%, not seasonally adjusted (from 4.9% to 7.2%, seasonally adjusted) for all worker and from 9.4% to 15.3% for construction workers.
The Obama transition team on Saturday released a simulation of the job-creating effects of a $775 billion fiscal stimulus package by economists Christina Romer, designee to chair the Council of Economic Advisers, and Jared Bernstein, designee to be Vice President Elect Joseph Biden's chief economic adviser. The study found that by the fourth quarter of 2010, the package would create 3.7 million jobs. Construction would account for the largest share of any industry: 678,000, or 16%. The report described the package as "prototypical" and not necessarily representative of what President-elect Obama will request, although the size and split between tax cuts and spending is likely similar. Obama called on Thursday for an "American Recovery and Reinvestment Plan" that "will modernize more than 75% of federal buildings and improve the energy efficiency of two million American homes, [build] solar panels and wind turbines; [construct] fuel-efficient cars and buildings;...equip tens of thousands of schools, community colleges and public universities with 21st-century classrooms, labs and libraries....Yes, we'll put people to work repairing crumbling roads, bridges and schools by eliminating the backlog of well-planned, worthy and need infrastructure projects,...starting to buld a new smart [electrical] grid [and] expanding broadband lines." He did not list dollar amounts.
The Congressional Budget Office (CBO) released its annual Economic and Budget Outlook on Wednesday. Of particular interest to contractors, CBO estimated that the Highway Account of the federal Highway Trust Fund would end fiscal 2009 on September 30 with a balance of $3.3 billion. But CBO warned that, because of tax receipts are deposited less frequently than payments are made out of the account, the account could run out of money in September, triggering delays in payments to contractors. The balance was projected to turn negative (that is, insufficient to allow timely payments in fiscal 2010, with the Transit Account becoming negative a year or two later.
AGC on Thursday released a member survey conducted in December in which an overwhelming majority of the 236 respondents said they had seen or expect a downturn in the following construction markets: highway, 93%; building, 92%; utility, 84%; water resources, 78%; other public work, 91%; and private construction, 96%. Three-quarters of respondents had laid off workers in the past 6-12 months as a result of the downturn; the median response was about 30% of the workforce laid off. Nearly two-thirds expect further layoffs in the next 6-12 months. Underscoring the value of federal stimulus funding, 86% of respondents said that if their state received extra federal funding and therefore was able to put additional projects out to bid, they would avert layoffs and/or hire additional workers. Five out of six said they would be able to begin work within a month or less after being awarded a project. Most also said winning new projects would affect their decision to purchase new equipment.