Posted December 9, 2021

AGC Data Digest – December 8, 2021

Nonresidential jobs increase for third straight month in November; October job openings set record, reports Ken Simonson, chief economist at Associated General Contractors (AGC).

Construction employment, seasonally adjusted, totaled 7,533,000 in November, an increase of 31,000 from the upwardly revised October total and a gain of 180,000 (2.4 percent) year-over-year (y/y) from November 2020, according to AGC’s analysis of Bureau of Labor Statistics (BLS) data posted on Friday.

Nevertheless, the November total was 115,000 (-1.5 percent) below the pre-pandemic peak in February 2020. Residential construction employment, comprising residential building and specialty trade contractors, increased by 10,300 in November, putting the total 95,000 (3.2 percent) higher than in February 2020. Nonresidential construction employment — building, specialty trades, and heavy and civil engineering construction — increased for the third-straight month, by 20,800, following gains of 34,600 in October and 32,700 in September.

But nonresidential employment remains 209,000 (-4.5 percent) below the February 2020 level. Nonresidential employment has regained only 67 percent of the jobs it lost between February and April 2020, compared to 83 percent for total nonfarm payroll employment and 120 percent for residential construction.

A total of 469,000 former construction workers were unemployed in November, a drop of 263,000 (-36 percent) y/y. The industry’s unemployment rate in November was 4.7 percent, not seasonally adjusted, compared to 7.3 percent in November 2020. Individuals are counted as unemployed only if they have “actively looked for work in the prior four weeks.” The huge decrease in the number of unemployed workers—83,000 more than the increase in construction employment y/y—suggests construction workers are either finding jobs in other sectors or dropping out of the workforce, at least temporarily.

There were 410,000 job openings in construction, an openings rate of 5.2 percent of the open and filled positions, seasonally adjusted, at the end of October, the BLS reported on Monday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. Openings jumped 62 percent y/y, and the openings rate was the highest for any month in the 21-year history of the series. Hires totaled 378,000, a decline of 23,000 (5.7 percent) y/y, and the hires rate was 5.0 percent of total employment, the second-lowest October rate ever. Layoffs and discharges totaled 139,000, down 61,000 (-31 percent) y/y, with a layoff rate of 1.8 per 100 employed, a record low for any month. The record high for the openings rate and record low for the layoffs rate strongly imply that the meager rate of hiring reflects an inability to find qualified candidates, not diminishing demand. Quits totaled 188,000, a jump of 56,000 (42 percent) y/y, with a quit rate of 2.5 percent, the second-highest October quits rate in series history.

The COVID-19 vaccination rate among construction workers in the four weeks through November 28 to December 4 was 57.0 percent, compared to 82.8 percent for other occupations, according to the construction safety and health research organization Center to Protect Workers' Rights (CPWR). Conversely, construction workers have a far higher “vaccine hesitancy” rate, 40.2 percent vs. 15.3 percent for other occupations. The figures, based on an ongoing survey of Facebook users by the Delphi Group of Carnegie Mellon University, suggest another reason contractors are short of healthy workers.

Dodge Momentum Index

The Dodge Momentum Index decreased 4 percent in November from October, Dodge Construction Network reported on Tuesday. The index is a monthly measure of the initial report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

In November, commercial planning fell 8 percent while institutional planning moved 5 percent higher. The value of nonresidential building projects continues to move in a sawtooth pattern, alternating between a month of gains followed by a loss. Since the pandemic began, nonresidential building projects entering planning have been more volatile than in past cycles, likely driven by increased challenges from higher prices and lack of labor. Despite these issues and a lack of underlying demand for some building types such as offices and hotels, the Momentum Index remains near a 14-year high. Compared to November 2020, the Momentum Index was 44 percent higher in November 2021. The commercial planning component was 45 percent higher, and institutional was 41 percent higher.”

Economic activity in the services sector grew in November for the 18th month in a row, with the Services PMI setting a record for the fifth time in 2021, the Institute for Supply Management reported on Friday. Construction is among the 18 services sectors, all of which reported growth in November. All sectors also reported increased new orders but also higher prices paid and slower deliveries, Items reported up in price that are significant for construction included aluminum (for the fifth month in a row), construction labor (4 months), construction contractors (5 months), polyvinyl chloride (PVC) products (3 months), steel products (11 months), and transportation costs (2 months). Lumber was reported down in price for the fifth straight month. Items listed in short supply included construction contractors (3 months), subcontractors (4 months), labor, and materials; copper; plastic pipe (2 months) and fittings; PVC; and steel products (3 months).