Construction employment climbs in 45 states in February; Dodge, ConstructConnect reports diverge
Sunday, March 26, 2023
by: Ken Simonson, Chief Economist, AGC America

Section: AGC National

Seasonally adjusted construction employment rose from February 2022 to February 2023 in 45 states and declined in five states and the District of Columbia, according to AGC’s analysis of data BLS posted today. Texas added the most jobs (37,900, 5.0%), followed by New York (20,400, 5.3%), Florida (19,700, 3.3%), Nevada (12,100, 11.8%), and Georgia (11,700, 5.5%). Rhode Island had the largest percentage increase (12.4%, 2,600 jobs), followed by Nevada, Montana (9.3%, 3,300), Nebraska (8.1%, 4,700) and Utah (7.3%, 9,400). West Virginia lost the most jobs over 12 months (-2,200, -6.5%), followed by Colorado (-1,500, -0.8%) and South Dakota (-1,200, -4.6%). The largest percentage losses occurred in West Virginia, South Dakota, and D.C. (-3.2%, -500 jobs). For the month, construction employment increased in 24 states, held steady in six states, and declined in 20 states and D.C. California added the most jobs over the month (7,600, 0.8%), followed by Texas (2,600, 0.3%), New Jersey (4,000, 2.5%), and Minnesota (2,200, 1.7%). The largest percentage gain (1.7% each) occurred in Minnesota and Rhode Island (400 jobs), followed by 1.5% gains in North Dakota (400 jobs) and Mississippi ( 700). Tennessee had the largest construction job loss in February (-1,700, -1.1%), followed by Iowa (-1,600, -1.9%) and Virginia (-1,200, -0.6%). Hawaii experienced the largest percentage loss for the month (-2.0%, -800), followed by Iowa and Alaska (-1.8%, -300). (For D.C., Delaware, and Hawaii, which have few mining or logging jobs, BLS posts combined totals with construction; AGC treats the changes as all from construction.)

Two reports on construction starts in February point in different directions for the first two months of 2023 compared to the same months of 2022. Vagaries of winter weather mean that underlying trends may be measured better year-to-date than by comparing single months. Total construction starts in current dollars (i.e., not inflation-adjusted) slumped by 17%, Dodge Construction Network reported on Monday. Year-to-date residential starts plummeted 31%, nonresidential building starts sank 14%, and nonbuilding starts increased 6%. For the month, “single-family units posted a gain for the first time in 13 months, and manufacturing starts continued to be very robust, showing signs of promise early into 2023,” chief economist Richard Branch wrote. “However, the downturn in commercial and institutional building starts could very well be the beginning of an anticipated slowdown as the construction sector pulls back in the face of higher interest rates and lagging economic growth.”

The value of construction starts in current dollars increased 7.8% year-to-date in January and February compared to the first two months of 2022, data firm ConstructConnect reported on March 17. Residential starts plunged 30% year-to-date, with single-family down 33% and apartments down 24%. Nonresidential building starts leaped 51% year-to-date, with the largest component—industrial (manufacturing)—starts soaring 239%, institutional starts up 48%, and commercial starts down 3.6%. Engineering (civil) starts rose 29% year-to-date, with increases for roads of 39%; water/sewage, 24%; bridges, 9.5%; power and miscellaneous civil, 9.0 %; airports, 145%; and dams/marine, 40%. “Substantial dollar amounts made available by Washington are driving infrastructure undertakings,” chief economist Alex Carrick wrote. “In nonresidential building, however, ongoing upticks in schools and hospitals are contending with further downdrafts by private offices and retail.”

The Architecture Billings Index (ABI) registered a score of 48.0 in February, down from 49.3 in January and the fifth-straight reading below 50, the American Institute of Architects (AIA) reported  on Wednesday. AIA calls the index “a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.” The ABI is derived from the share of responding architecture firms that report a gain in billings over the previous month less the share reporting a decline in billings, presented on a 0-to-100 scale. Any score below 50 means more firms reported decreased billings than increased billings. Readings for practice specialties (based on three-month averages) varied: mixed practice, 57.0 (up from 56.2 in January); institutional, 46.9 (down from 47.8); residential (mainly multifamily), 46.2 (up from 45.2); and commercial/industrial, 45.8 (down from 46.4). An index of new design contracts slipped to 51.3 from 53.4 in January.