Construction employment added 15,000 jobs on net in June, according to Associated Builders and Contractors. On a year-over-year basis, the industry has expanded by 121,000 jobs鈥攁n increase of 1.5%.
The construction unemployment rate fell from 3.5% in May to 3.4% in June. The national unemployment rate for all industries fell from 4.2% in May to 4.1% in June as the U.S. economy added 147,000 jobs.
Nonresidential construction added 9,200 jobs in June, with growth in one of the three subsectors. Nonresidential specialty trade contractors added 12,400 jobs; heavy and civil engineering lost 2,800 jobs; and nonresidential building lost 400 jobs.
鈥淰irtually every economist has been waiting for indications of stagflation,鈥 said ABC Chief Economist Anirban Basu. 鈥淭he wait continues. June鈥檚 employment report, coupled with recent inflation data, indicate that the U.S. economy continues to demonstrate solid momentum, stable unemployment and declining inflation. Construction added jobs for a second consecutive month.
鈥淲hile many will cheer this jobs report, some construction firm leaders may not be among that group,鈥 Basu continued. 鈥淲hile abating fears of recession are comforting, these data effectively slammed the door shut on a July Federal Reserve interest rate cut. A growing fraction of contractors is experiencing weakness in backlog as projects are postponed in an uncertain economic environment coupled with stubbornly elevated borrowing costs.鈥
Basu said construction materials prices have begun to increase, in part because of substantial tariffs on Canada, Mexico and China.
鈥淎ll things equal, that will drive up construction delivery costs, render more projects uneconomical and diminish contractor margins,鈥 Basu said. 鈥淪hifting immigration policy stands to reinforce these dynamics. Close attention should be paid to the profit margins component of ABC鈥檚 Construction Confidence Index in the coming months, which should reflect how these higher costs are affecting contractor operations.鈥
