Forecast for construction employment positive in 2005

Construction industry economists predict a positive outlook for industry employment despite the decreased job gains from November to December 2004, according to the most recent report by the U.S. Bureau of Labor Statistics.

The BLS reports the construction industry added 258,000 jobs in 2004 for a total of approximately 7 million. The agency’s 10-year outlook for construction employment is a positive 15 percent gain, which mirrors the economy as a whole.

“I would have made the same prediction,” said Kenneth Simonson, chief economist for the Associated General Contractors of America, the country’s largest and oldest construction trade association.

Simonson said construction industry employment numbers grew twice as fast as other fields. He also said the industry grew at record levels for nine straight months in 2004, making it one of the strongest sectors in the economy.

“Construction did very well for jobs,” said Simonson. “It’s been a major contributor to economic recovery for the last three and a half years.”

Bob Gasperow, executive director of the Construction and Labor Research Council, said most of the gains in the construction industry have been the result of a booming residential housing market. He said there would be less of this type of construction for 2005, and more industrial and commercial building.

“If there is any upturn, there could be a labor shortage,” Gasperow said.

The BLS reported non-farm payroll employment increased by 2.2 million last year to a seasonally adjusted 132.3 million. This represents the single largest annual gain in employment since 1999.

William Buechner, vice president of economics and research for the American Road and Transportation Builders Association, said he expects employment for the transportation construction industry to grow by 2 percent to 3 percent this year. This expansion would ride an expected 4 percent to 5 percent growth for the industry as a whole.

Buechner said employment in the transportation sector of the construction industry was less volatile because of sustained state and federal government funding. But much of the industry’s economic health would be dependent on Congressional passage of the Federal Highway Safety Administration’s Safe, Accountable, Flexible and Efficient Transportation Act of 2003.

Approval of the SAFETEA bill would be a reauthorization of the Transit Equity Act for the 21st Century. Legislation for that bill died in September 2003 and has been on short-term extensions since its expiration.

“If Congress fails to enact a new transportation bill, or [if the country experiences] general recession, that’s going to be a concern,” Buechner said. The possibility of Congress passing the bill this year were as endless as in 2004, he said.

“Any guess I make would be a guess,” Buechner said of trying to predict the bill’s approval chances with the new Congress.

Other factors that could derail potential growth for 2005 or beyond are construction material price increases, specifically that of steel and cement. Prices for construction materials were as much as 9 percent higher than this time last year.

Patrick Beeson can be contacted at pbeeson@randallpub.com.