Economy Shows More Signs of Life But Construction Lags

The rate of decline in overall employment is gradually slowing. First-time unemployment claims dropped in mid-September, suggesting that September employment losses will shrink again, as they did in August. However, construction-particularly nonresidential construction-continues to hemorrhage jobs. Only two states-North Dakota and Louisiana-added construction jobs between August 2008 and August 2009, the Bureau of Labor Statistics (BLS) reported on September 18. From July to August, seasonally adjusted construction employment rose in 16 states, an improvement over the 12 states that added jobs from June to July. (Seasonal adjustment takes into account variations due to weather and differing numbers of work days.) State-level data are not broken out between types of contractors, but national data suggest that residential construction is slowly improving while nonresidential continues to deteriorate. A September 23 BLS report on mass layoff events-involving 50 or more workers from a single employer-listed construction first among seven major industry sectors that experienced the largest number of August initial layoffs. "Construction accounted for 11 percent of [layoff] events and 10 percent of initial claims [from newly laid-off workers], an increase from 10 percent of events and 7 percent of claims in August 2008," BLS reported. Initial claims jumped 23 percent in construction compared to August 2008, while dropping 13 percent in all other industries combined. More federal stimulus funds should reach contractors in coming months as agencies belatedly ramp up contract awards. But the increase is unlikely to offset continued shrinkage in private and state and local government-funded projects. Many contractors report dwindling backlogs and fierce competition for what work does appear. Meanwhile, bank financing remains difficult, if not impossible, to obtain for developers. To report changes in market conditions, favorable or not, write simonsonk@agc.org.