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- The overall construction spending modestly edged down in the latest month due to a combination of government spending cuts and modestly less commercial real estate construction. The broad trend, nonetheless, is on the rise. That’s good news for workers in construction and for general contractors.
- Specifically, total dollar value of recently completed construction fell 0.3 percent in November from the month earlier. The construction of government-funded health care facilities, new schools, and power plants declined while the private sector construction of residential units increased. Commercial real estate construction was essentially unchanged.
- Despite the volatile monthly data, the trend is clearly on the upswing. From the cyclical low point of several years ago, the total construction dollar spending is up by roughly 20 percent. Construction of new hotels and lodging facilities are coming back strongly with a 100 percent jump from 2010. On the other end, the construction of buildings for religious worship has been on a long-term decline. (See graphs below).
- Because of more dollars on construction, the employment in this sector looks positive. Construction related jobs of specialty trade and general contractors took a big hit during the recession, falling from 5 million to 3.4 million. Now, the jobs are coming back with 3.8 million workers in this sector.
- Apartment vacancy rates are very low. In addition vacancy rates of office, retail, and warehouse buildings have been falling. It would appear therefore that more construction workers are needed. With oil prices low and oil drilling jobs to be cut soon, there could be more workers switching out of the oil industry and into construction in 2015. The financial inducement is there as well with construction workers’ earnings rising 2.7 percent in the most recent data, which is faster than the general wage growth of 2.1 percent.
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