Gains in Residential Construction Employment, Other Sectors Lagging

White construction hard hat worn for safety on construction sites.

According to the latest report from the Associated General Contractors of America (AGC), Arlington, Va., construction employment increased by 27,300 jobs in November.

However, the majority of the gains are in the residential categories, which masks the more sluggish growth in nonresidential construction categories.

“The construction industry recovered a bit in November, but the future is far from certain for the industry,” said Ken Simonson, AGC’s chief economist. “The nonresidential building and infrastructure segments are likely to shed jobs again amid an increase in coronavirus case counts, unless Congress acts quickly to provide needed relief.”

Construction employment overall climbed to 7,360,000 jobs in November. However, employment in the sector remains down by 279,000 jobs (3.7%) since the most recent peak in February 2020. The pandemic initially triggered widespread project cancellations and interruptions that resulted in the loss of 1.1 million construction jobs in March and April.

In addition, the disparity between residential and nonresidential construction widened in November, according to Simonson. Residential building and specialty trade contractors added 15,400 jobs in November and have now recouped 96% of the employment losses they incurred in March and April.

In contrast, nonresidential construction employment (comprising nonresidential building, specialty trades and heavy and civil engineering construction) increased by only 11,900 jobs in November and has recovered only 56% of the jobs lost in March and April.

The industry’s unemployment rate in November 2020 was 7.3%, up from a rate of 4.4% in November 2019.

The AGC added that pandemic-induced project cancellations in the nonresidential construction categories, as well as looming tax bills for firms that used Paycheck Protection Program loans to save jobs, threaten to undermine future job growth in the nonresidential area.

“These new taxes, coming on top of greater market uncertainty as coronavirus cases surge, will make it hard for many construction firms to retain current workers, not to mention add new ones,” said Stephen Sandherr, AGC’s CEO.

According to the AGC, without tax relief and other needed recovery measures, November’s modest job gains are likely to be fleeting.

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