AGC expects job numbers to swell following winter chill

Real Estate Weekly,  March 21, 2007  

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Calendar and climate quirks combined to chill construction employment in February, but nonresidential segments should rebound this month, according to Ken Simonson, chief economist for The Associated General Contractors of America (AGC).

Simonson was commenting on the February employment report from the Bureau of Labor Statistics (BLS).

In February, construction employment tumbled by 62,000, seasonally adjusted, the largest one-month slide since 1991 Weather anomalies deserve some of the blame, according to Simonson, along with the housing slowdown.

"Employment estimates are based on the payroll period that includes the 12th day of each month," Simonson explained.

"In February, that included a week in which ice storms blanketed much of the U.S., whereas in January, the 12th was the end of an exceptionally balmy week. As a result, some contractors may have started jobs in January that normally would not have been done until later. Conversely, hiring may have been postponed in mid-February."

Aside from these anomalies, there are two reasons to think that nonresidential construction will resume adding jobs soon, says the AGC.

First, architects and engineers, whose work gets turned into construction within months, added workers for the 36th straight month. A/E employment has risen nearly 5% in the past 12 months. "I expect their handiwork to show up in refinery, power plant, manufacturing, hotel and hospital construction spending over the next several months," said Simonson.

Second, nonresidential construction categories themselves have been growing, aside from the February hiccup

From February 2006 to February 2007, combined employment in nonresidential building, nonresidential specialty trades and heavy and civil engineering construction increased by 115,000 or 2.7%, nearly double the 1.5% rise in total nonfarm payroll employment. Meanwhile, Census Bureau data show that nonresidential construction spending is on a tear--up 15% in January compared to January 2006.

"I remain very confident that the nonresidential construction industry will be healthy right through 2007, and probably beyond," Simonson concluded.

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