After losing around 10,000 jobs a month for the past four months, the nonresidential building construction sector lost 1,400 jobs in May, according to the June 5 employment report by the U.S. Labor Department. Still, 84,800, or 10.2 percent, jobs in the industry have been lost since May 2008 as employment reached 744,700 (see graph).
Meantime, the pace of job losses in residential building construction continues to mount as employment shrank by 11,300 for the month and is down 146,400 year-over-year. Total private construction employment, which includes specialty trade contractors, fell by 59,000 jobs in May and is now down 990,000 from May 2008.
Overall, U.S. employers cut 345,000 jobs from April to May, and 5,366,000 from the same time last year. The nation’s unemployment rate now stands at 9.4 percent, surpassing levels not experienced since August 1983. Since the start of the recession in December 2007, the economy has lost 6 million jobs, according to the department.
As has been the case with a number of economic data releases in recent weeks, simple interpretation of today’s jobs report is not possible. While the number of jobs lost in May fell far short of the consensus estimate of negative 525,000, the unemployment rate rose above the consensus prediction of 9.2 percent.
What can be said is that nonresidential construction’s performance continues to rise above expectations. The construction spending index released earlier this week indicated that nonresidential construction volumes remain remarkably stable despite a period of nearly unprecedented financial dislocation. In addition, the loss of just 1,400 jobs in the nonresidential building industry is a reflection of contractors adjusting to the current business climate.
However, the latest employment report should hardly be viewed as good news. The adult male unemployment rate in the U.S. is now over 10 percent, a reflection largely of the significant declines in employment opportunities in goods producing industries, such as manufacturing and construction. The hope is that the pace of employment loss continues to wane in June and during the months ahead.
Anirban Basu is chief economist with Associated Builders and Contractors, a national association representing 25,000 merit shop construction and construction-related firms within the U.S.