There is a discussion over at Nouriel Roubini's blog about construction jobs, so I have produced a few charts from the Bureau of Labor Statistics. While the absolute number of such jobs is still rising, the rate of growth has plunged sharply and is now touching zero. In my opinion, overall construction jobs are being supported by older (1 yr+) housing contracts still in the pipeline and by non-residential projects that are currently quite strong.
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Total Construction Jobs
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- Total construction jobs have stopped growing.
Total Construction Jobs- Residential construction is starting to lose net jobs.
Residential Construction Jobs- Non-residential construction is still adding jobs but at a rapidly diminishing rate.
Non-Residential Construction JobsIn summary, I think we will soon start seeing significant job losses in the construction sector as existing contracts for homes are completed and are not replaced (new starts are down 30+%) and non-residential winds down as well. How many jobs? Total employment in the sector is currently 7.7 million and during the previous major downturn in 1990-92 as many as 10% of the jobs were lost. If we run along the same course, we could be losing ~65.000 jobs per month. In the past 12 months we were adding an average of 125.000 new jobs per month in the private sector, so such a loss from the construction sector alone could be very significant.
I haven't posted for awhile but stop in often to be "enlightened" by your charts and analysis.
ReplyDeleteI am not sure how the Bureau of Labor Statistics handles self employed contractors and subcontractors. From my experience typically they will "stay in business" for as long as they can "burn", then desperate for cash there equipment and tools will be sold off like in the 80s.
Anecdotally people in the construction trades in this area have seen at least a 50% drop in work and quite a few have no jobs on the books for the spring start. One cabinet shop in a nearby small city offered to sell his business to a previous employee who has a shop, but what would he be really buying equipment or customers?
I also noticed that some of the bigger excavation firms have there yards staged with equipment that is usually staged on the next project to start.
My point I think is that Job numbers are a lagging indicator but do show the down side potential, permits point to construction volume going forward. I also think that by June that if construction does not pick up (which I believe to be the case) then the Job loss numbers may rocket up as company's and contractors "shrink" back to the size they were at previous to this latest boom. I wonder if shrinking back will be enough? I do not think many people in the trades see the deflation that is coming our way.
Dear anonymous,
ReplyDeleteThks for your comment.
You have hit on a very important point concerning jobs. The construction business is full of such self-employed small contractors. They will remain "employed" and get counted by BLS until they permanently shut down.
Construction jobs are just 7% of all private employment, but during 2001-05 the sector created 30% of all new jobs. Very disproportionate.