Residential Construction Spending Increases by 2.6 Percent in April Amid Concerns with Nonresidential and Employment Sectors
June 4, 2012

Residential construction spending rose 2.6 percent in April and is up 6.2 percent compared to the same time last year, according to the June 1 report by the U.S. Census Bureau.

Overall, total construction spending - which includes both nonresidential and residential - is up 0.3 percent for April and up 6.8 percent from one year ago, according to the study. But, according to Associated Builders and Contractors (ABC) chief economist Anirban Basu, the real concern lies in the nonresidential sector.

"For the fourth straight month, construction spending continues to slide," Basu says. "This current trend is largely a reflection of the way the economy had been when decisions to move forward with projects were made.

Another area of concern involves construction employment, which has experienced its largest decline in two years last month by 28,000 despite the 0.3 percent increase in overall construction spending, according to a report released today by the Associated General Contractors of America (AGC).

"With construction employment shrinking for the fourth month in a row, the industry is clearly having a difficult start to the year," says Ken Simonson, the association's chief economist. "In particular, cuts to public sector investments in construction are taking their toll, given that heavy and civil engineering construction experienced the largest employment decline within the sector."

Total construction employment now stands at 5,516,000, or 0.5 percent lower than a month earlier but 18,000 higher (0.3 percent) than in May 2011, the economist said. Meanwhile the industry's unemployment rate is at 14.2 percent, nearly double the national average. He added that overall construction employment is still far below its peak level of 7,726,000 in April 2006.

The nonresidential construction sector lost 17,400 construction jobs in May, Simonson noted. Residential construction lost 11,000 total jobs as the residential specialty trade contractors shed 10,000 jobs and residential builders lost 1,000 positions in May.

"Getting a highway and transit bill passed would certainly help counter any possible backslide in construction employment," says Stephen E. Sandherr, the association's chief executive officer. "While the overall economy will need to be much stronger before private sector construction activity and employment begin to approach pre-recession levels, investments in infrastructure will certainly help put more construction workers back on the job."

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