Chart tracking construction payroll jobs and housing starts (click for larger version)
Last week we learned that the construction industry added 2,000 jobs in June, decreasing that month’s unemployment rate to 12.8 percent — the lowest it has been since 2008. Meanwhile, the housing market seems to be on a faster pace of recovery.
And even with those good bits of news, one economist warned last week that the industry could be facing a skilled-labor shortage.
But why, if housing starts are coming back, isn’t construction’s economic recovery coming at a similar pace? Bill McBride says it will. Just give it time.
“Oh, Grasshopper,” McBride wrote in a recent post at Calculated Risk, “the construction jobs are coming.”
McBride explains that while the state of housing obviously has a direct effect on the construction industry, there is a delay between that effect.
“First, construction includes residential, commercial and other construction (like roads). Even after housing starts began to collapse, commercial real estate was still booming and workers shifted from residential to commercial (many commercial projects have long time frames – and many developers remained in denial).”
Using that logic, McBride predicts that the same delay that occurred between the housing collapse in 2006 and the construction job losses that followed in 2007, will apply to the recovery of both industries as well. Housing has recovered and construction will follow.
“Even though construction is down since the beginning of the year, and only increased by 2,000 jobs in June, construction employment appears to have bottomed, and should add to both GDP and employment growth in 2012,” McBride wrote.
It’s simple logic for sure, but at least there’s precedent. Plus, it’s a lot better than the alternative predictions we’ve heard.
