Nonresidential Employment Increases in August, but Builder Confidence Continues to Waiver

On Friday, Associated Builders and Contractors (ABC), a national construction industry trade association representing more than 23,000 members, reported that nonresidential construction employment increased by a net 28,300 positions August, with growth in all three subcategories.

Nonresidential specialty trade added the most jobs on net, increasing by 14,000 positions. Heavy and civil engineering and nonresidential building added 13,500 and 800 jobs, respectively.

The construction unemployment rate fell to 3.2% in August, ABC reported. Unemployment across all industries declined from 4.3% in July to 4.2% last month.

Adding background and analysis to the report, ABC Chief Economist Anirban Basu said:

“August’s employment report is perfectly consistent with the notion of a soft landing. Unemployment fell both economywide and in the nation’s construction sector. Job growth in nonresidential construction was both brisk and broad-based. Moreover, Federal Reserve officials continue to indicate that they are ready to reduce interest rates, which is expected within the next two weeks.

And yet, the level of concern has been rising among contractors. According to both ABC’s Construction Confidence Index and Construction Backlog Indicator, the outlook among contractors is dimming gradually. Many projects have been postponed recently in the context of still-elevated borrowing costs and tighter lending conditions.

Despite indications that interest rates are coming down, they may not fall as rapidly as many contractors hope. The economy remains too strong to warrant rapid declines in interest rates implemented by the Federal Reserve. Moreover, average hourly earnings expanded more rapidly in August than anticipated, suggesting that inflation remains sticky and that Fed officials may only be able to reduce rates gingerly.”