The U.S. construction sector experienced an employment decline in February, reflective of the continued volatility in the industry amidst ongoing uncertainty, which has led to slowed spending and hiring activity.
According to the Associated Builders and Contractors (ABC), which analyzed new data from the U.S. Bureau of Labor Statistics, the industry lost 11,000 jobs in February, though the sector still recorded modest annual growth year-over-year with the addition of 42,000 jobs or 0.5 percent growth in overall construction employment.
The job losses were concentrated primarily in nonresidential construction. Heavy and civil engineering construction lost 6,500 jobs, while nonresidential specialty trade contractors shed 1,400 jobs; however, these figures were partially offset by the addition of 4,100 positions, which demonstrates demand continues to exist, with certain commercial construction projects remaining relatively stable.
Industry analysts believe the variation across sectors highlights how different segments of construction are responding unevenly to economic conditions stemming from geopolitical uncertainty, high interest rates, higher material costs, and up-and-coming projects.
Construction has been in decline for several quarters, and the slowdown may not be employment-specific, as the industry’s backlog, which measures the amount of contracted construction work to be completed, also dropped to its lowest level in four years, which means contractors could be securing fewer new projects, which could have implications for hiring in the coming months.
Construction spending has also been in decline over the last several quarters, reflective of the cautious investment environment taken by project owners who must juggle the various challenges currently present as higher interest rates have spilled over to real estate financing and infrastructure development. Some analysts maintain optimism that long-term demand could strengthen due to infrastructure spending, particularly federal infrastructure projects, growth in the manufacturing sector, and persistent housing shortages, but this will depend on broader economic conditions.
