Washington, D.C.ââTodayâs employment report appears to understate the contribution of nonresidential construction as a job creator,â Ken Simonson, chief economist for 51ˇçÁ÷ of America (51ˇçÁ÷), said today. Simonson was commenting on the August 3 payroll employment report from the Bureau of Labor Statistics (BLS).
âSeasonally adjusted total construction employment dipped in July and was down by 53,000 or 0.7 percent compared to July 2006,â Simonson remarked. âBut that total hides the vigorous growth in nonresidential construction that is occurring.
âOn Tuesday, the Census Bureau reported that nonresidential construction spending leaped 14 percent from June 2006 to June 2007,â Simonson pointed out. âLast Friday, the Bureau of Economic Analysis estimated that private nonresidential investment in structures soared 15 percent from the second quarter of 2006 to the same quarter of 2007. And on July 25, informal surveys included in the Federal Reserveâs âBeige Bookâ suggested that nonresidential construction remained vibrant in July.
âYet todayâs employment report shows job gains of only 1.5 percent in the past 12 months in BLSâs three nonresidential categoriesânonresidential building, specialty trades, plus heavy and civil engineeringâbarely edging out the 1.4 percent gain in overall nonfarm payroll employment,â Simonson commented. âMeanwhile, residential building and specialty trades employment showed a combined decrease of only 3.4 percent, even though Census estimated the drop in residential spending at 16 percent.
âAt least part of the explanation for these discrepancies probably lies in the mislabeling of workers as âresidentialâ specialty contractors,â Simonson speculated. âIndustry contacts tell me there are many subcontractors doing commercial work who formerly concentrated on residential work. If their companies still use their former industry code, the workers will be miscounted as staying in the residential specialty trade industry.
âA switch of about 400,000 workers from residential to nonresidentialâone out of six âresidentialâ specialty employeesâwould bring the drop in residential employment into line with the fall in spending and would roughly account for how so much nonresidential work could be built,â Simonson estimated.
âI expect nonresidential jobs to keep growing,â Simonson concluded. âThere are many long-term projects under way and on the drawing board. In addition, architectural and engineering services employmentâa harbinger of future constructionârose 3.2 percent in the past 12 months, twice as fast as overall jobs.â
51ˇçÁ÷ of America (51ˇçÁ÷) is the largest and oldest national construction trade association in the United States. 51ˇçÁ÷ represents more than 31,000 firms, including 7,000 of Americaâs leading general contractors, and over 12,000 specialty-contracting firms. More than 12,000 service providers and suppliers are associated with 51ˇçÁ÷ through a nationwide network of chapters. Visit the 51ˇçÁ÷ Web site at . 51ˇçÁ÷ members are "Building Your Quality of Life.â
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