Contractors Shrug Off Recession Fears and Keep Hiring

Abstract

August 5, 2022 Scott Judy KEYWORDS Construction / Construction Jobs Order Reprints No Comments "Recession-what recession?" That was the response of Brian Coulton, chief economist with credit rating agency Fitch, to the Bureau of Labor Statistics' surprisingly strong July jobs report. Coulton noted further that the U.S. economy is creating new jobs at an annual rate of 6 million, or "Three times faster than what we normally see historically in a good year." Indeed, predictions of a coming economic slowdown failed to materialize in July, according to the BLS report, released August 5, which showed that U.S. jobs surged by 528,000, or more than twice the figure expected by some economists. For its part, the construction industry also bucked predictions of a coming slowdown, and instead posted across-the-board jobs gains in all sectors to add an estimated 32,000 positions overall during the month. As a result, the industry's unemployment rate inched downward from June's 3.6% rate to 3.5%-its lowest July rate in four years, according to AGC of America-and was well down from its year-ago figure of 6.1%.The Numbers As they did in June, specialty trade contractors once again led the way, adding 21,500 jobs of construction's overall 32,000 gain in July. In the nonresidential sector, specialty trade contractors added 10,300 positions during July.Building contractors added 7,800 positions overall in July, with nonresidential firms contributing an estimated 4,900 jobs to that overall total. Stephen E. Sandherr, chief executive officer with Associated General Contractors of America, stated, "Construction firms are doing their best to add new workers to keep pace with strong demand for construction," adding that "The industry's job gains would have been even higher if there were more people available to hire."Just days prior on Aug. 2, Anirban Basu, chief economist for Associated Builders and Contractors, had noted in a press release regarding construction job openings that "Demand for workers is clearly fading due to rising borrowing costs, increasingly pervasive pessimism and growing risk of recession."Responding to the jobs report, Basu remarked that potential headwinds still await. "Yes, the construction industry also added a healthy number of jobs in July," he said, "But the impact of macroeconomic deterioration is already apparent in other construction data."He elaborated: "Ongoing weakness in certain commercial real estate segments, sky-high materials prices and shortages of skilled construction workers have forestalled a growing number of projects by suppressing demand at a time when the cost of delivering construction services remains elevated."One contractor so far not seeing declining demand is Larry Rooney, president of Tulsa, Okla.-based Manhattan Construction Group.