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Construction Employment



​​One of the areas that we would expect to have seen increase sharply at this point would be residential construction workers. The mainstream media has been touting the housing recovery for well over a year now yet residential construction has remained stagnant.

​The disconnect between the housing data and the real demand for construction workers is important and suggests that the demand for new homes has not yet reached a level where builders are forced to take on more full time labor. One of the reasons why home construction has historically been very important to the economy is the impact of the multiplier effect from construction. Without employment turning up the "multiplier effect" remains muted.





The data illustrated in Chart 1 below shows that total construction jobs have fallen back to 1996 levels and as a percent of total nonfarm payrolls are now at a point not seen since 1946 . We were surprised at just how small the construction sector is in terms of overall employment, 4.1 percent of total nonfarm payrolls, or 5.5 million construction jobs of the 133 million employed. So, not only stronger housing starts will add to the economy in 2013, the start of hiring in the construction industry can at least add 500k workers.



And that strong demand in 2013 of construction workers will face a tremendous challenge : Aging and shortages of skilled workers.​​

​According to a new SmartMarket Report from McGraw-Hill Construction entitled "Construction Industry Workforce Shortages: Role of Certification, Training and Green Jobs in Filling the Gaps." It is the first study to focus exclusively on design and construction professionals and trade workers. Skilled workers have left the industry as a result of the economic downturn, an aging workforce and an insufficient pipeline of younger workers. The study shows that 69% of architect, engineer, and contractor (AEC) professionals expect skilled workforce shortages in next three years; 32% of AEC are concerned about a shortage of specialty trade contractors by 2014; 49% of the general contractors are concerned about finding skilled craft workers by 2017, and 37% of architect and engineering firms are concerned about finding experienced workers. Skilled green workers are in even more demand; 86% of architects and engineers and 91% of contractors are finding too few green skilled employees.

US Construction Jobs - A very Constructive Story

( From ​Money Game, NAHB, FRED, EcoIntersect , SteetTalklive )

Overview of US Construction Spending



​​The U.S. Census Bureau of the Department of Commerce announced last week that construction spending during December 2012 was estimated at a seasonally adjusted annual rate of $885.0 billion, 0.9 percent above the revised November estimate of $876.9 billion. The December figure is 7.8 percent above the December 2011 estimate of $820.6 billion.



The value of construction in 2012 was $850.2 billion, 9.2 percent above the $778.2 billion spent in 2011.



Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was almost four years of headwinds for GDP. Construction spending is now in the fourteenth month of year-over-year spending expansion, and the rate of growth is flat (the rate of growth has been in a channel averaging just under 10% in 2012) .



​​Construction (which historically is an major economic driver) is a literal shadow of its former self. Its contribution to GDP is down $400 billion from its peak level in 2006. The main driver of construction spending is the private sector. Here is the historical breakdown. The graph below uses US Census seasonally adjusted data.

​

Obvious from the graph below that public spending on construction is falling off, while private spending is slightly trending up. The overall effect is that construction spending is near the same place it was in early 2010.

For the details :



​​PRIVATE CONSTRUCTION – Spending on private construction was at a seasonally adjusted annual rate of $614.9 billion, 2.0 percent (±1.3%) above the revised November estimate of $602.9 billion. Residential construction was at a seasonally adjusted annual rate of $308.2 billion in December, 2.2 percent (±1.3%) above the revised November estimate of $301.7 billion. Nonresidential construction was at a seasonally adjusted annual rate of $306.7 billion in December, 1.8 percent (±1.3%) above the revised November estimate of $301.2 billion.



The value of private construction in 2012 was $574.6 billion, 16.1 percent (±1.8%) above the $495.0 billion spent in 2011. Residential construction in 2012 was $276.8 billion, 16.8 percent (±2.1%) above the 2011 figure of $237.0 billion and nonresidential construction was $297.7 billion, 15.4 percent (±1.8%) above the $258.0 billion in 2011.



PUBLIC CONSTRUCTION – In December, the estimated seasonally adjusted annual rate of public construction spending was $270.1 billion, 1.4 percent (±2.5%)* below the revised November estimate of $274.1 billion. Educational construction was at a seasonally adjusted annual rate of $65.5 billion, 0.7 percent (±4.9%)* below the revised November estimate of $66.0 billion. Highway construction was at a seasonally adjusted annual rate of $78.5 billion, 0.7 percent (±5.6%)* above the revised November estimate of $78.0 billion.



The value of public construction in 2012 was $275.6 billion, 2.7 percent (±1.6%) below the $283.3 billion spent in 2011. Educational construction in 2012 was $67.7 billion, 3.5 percent (±3.6%)* below the 2011 figure of $70.1 billion and highway construction was $79.3 billion, 0.6 percent (±3.8%)* above the $78.9 billion in 2011.

Other Very Interesting Charts

Residential construction spending

​

​The graph below shows the total US residential spending compare to the total US construction spending. At the peak in 2006, residential contribution for the total US construction spending reached almost 57%. But we see that the average is around 43% : at 35% now, it remains well below historic average...

Total US residential spending

​ compare

​ Total US construction spending

US Construction Workers



The graph below shows ​​the total number of workers in the construction industry compare to the total of US workers.At 4.2% currently, it is well below the historic average of 4.8%​. At 134.825 millions total US workers, if the ratio goes to 4.8% from the current 4.2%, it does represent a job increase of 539 thousands jobs for the US construction industry.

Total US Construction Workers

compare

Total US Workers​​

US Construction Spending



And the last comparison, is the ratio of total US construction spending compare to the total number of US construction workers. So what this graph mean is that spending per worker has not been that high since 2005 where it reachad almost 160 millions $ per thousand workers; so if we think that construction spending will continue to grow and the number of workers being normalize​​.



So if we think that another 9% increase in total US construction spending for 2013 is realisitc, then 850.2 billions $ times 1.09 equal 926.7 billions $.. And if we expect the ratio to normalize at 148 millions $ per thousands workers, we have



926,7 billions

__________ = 148 millions $

Thousands workers​​​​

​​​

​

We find 6.26 millions workers projected compare to 5.73 millions actually, we have a projected increase of 530 thousands more US construction workers​.

US Total Construction Spending

compare

Total US Construction Workers​​

So looking at different way of estmating the needed workers ( and that does not count the workers planning to retire this year ), we are finding very conseratively that the US will create more than 500 thousands jobs in the construction industry within the next year or so...



It is a very constructive story indeed !



Next research, I ll look specifically at the residential sector.... Stay Tuned...​​ ​ ​