Construction sector continues to show rebound

By Jack Keough

The latest job report shows that 48,000 jobs were created in the construction industry in February and gives further indication that the housing market is in a turnaround.

To further drive home that point, builders have added 151,000 jobs in the past five months. These numbers show that this is the best hiring increase since the housing market began its plunge seven years ago.

The U.S. Bureau of Labor Statistics (BLS), which released the jobs report Friday, showed the gains equally split between residential (+17,000) and nonresidential specialty trade contractors (+15,000). Nonresidential building construction also added 6,000 jobs. Residential trade contractors include plumbers and electricians.

There is other good news for the housing market and for electrical distributors. A drop in foreclose rates is leading to more business for builders. Home mortgage rates are low and in January builders filed for the largest number of building permits in five years.

In all, 236,000 total jobs were created in February, the best performance for the job market since November 2012, much higher than many economists had predicted. The jobless rate dropped to 7.7%. Few economists  had forecast an increase of more than 200,000 with most predicting an increase in the 170,000 range.

A separate report from private payrolls processor ADP showed that the economy added 198,000 new jobs in February, with 21,000 of those in construction.

Significantly more construction firms are planning to add new staff than plan to cut staff while demand for many types of private sector construction projects should increase this year according to survey results released recently by the Associated General Contractors of America and Computer Guidance Corporation. The survey, conducted as part of Tentative Signs of a Recovery: The 2013 Construction Industry Hiring and Business Outlook, provides a generally optimistic outlook for the year even as firms worry about rising costs and declining public sector demand for construction.

“While the outlook for the construction industry appears to be heading in the right direction for 2013, many firms are still grappling with significant economic headwinds,” said Stephen E. Sandherr, the association’s chief executive officer. “With luck and a lot of work, the hard-hit construction industry should be larger, healthier, more technologically savvy and more profitable by the end of 2013 than it is today.”

Many segments of the private construction sector appear poised to expand this year. Firms are most optimistic about the outlook for hospital and higher education construction, with 38% predicting demand for these types of structures will grow and another 39% expecting demand to remain stable. Contractors are also optimistic that demand for power construction will increase in 2013.

Employment levels in construction are still very low compared to the numbers during the housing boom. The industry would have to add about 1 million workers overall to return to the high levels seen 10 years ago.

Builders may be facing a potential problem in finding workers, according to several news reports. Some construction workers who weren’t able to find work in their trades have moved on to other jobs and industries and the acceleration of the housing market is making it difficult for builders to attract skilled workers.

Meanwhile, manufacturers added 14,000 additional workers in February. That is roughly equal to the average monthly gain of 13,000 experienced in 2012.  Hiring in the manufacturing sector was much higher in the first six months of the year than the latter part of 2012 as business slowed considerably, particularly in the last quarter.

The BLS reported job declines in machinery (down 1,800), electrical equipment and appliances (down 1,800), petroleum and coal products (down 1,500), and computer and electronic products (down 1,200).

Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at or

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