Associated Builders and Contractors Inc.

Construction Loses 28,000 Jobs in May But Unemployment Rate Slips

The nation’s construction industry lost 28,000 jobs in May, yet the unemployment rate fell to 14.2 percent, according to the June 1 employment report by the U.S. Labor Department. That is down from 14.5 percent in April and down from 16.3 percent in May 2011.

“There was really nothing to cheer about in this report,” said Associated Builders and Contractors Chief Economist Anirban Basu. “While the construction industry unemployment rate did drop, it’s likely an indication that many construction workers have either found jobs in other industries, or have simply vanished from the workforce."

A substantial share of job loss was in the heavy and civil engineering segment, which lost 11,200 jobs in just one month wiping out gains made over the past year. Heavy and civil engineering is down 1,000 jobs compared to one year ago.

Nonresidential specialty trade contractors lost 7,700 jobs over the month, but have gained 4,600 jobs from the same time last year, which translates into 0.2 percent annual growth.

“As predicted by ABC’s forward-looking construction backlog indicator, the recovery of nonresidential construction has stalled,” Basu said. “Investors have become much more cautious in the wake of slowing job growth, European sovereign debt issues and widespread recession, and increasingly volatile financial markets."

The residential construction sector took a hit as it shed 1,000 jobs in May, but gained 5,500 jobs, or 1 percent, compared to a year ago.

In contrast, nonresidential building construction added 1,500 jobs last month and is up by 9,900 jobs, or 1.5 percent, from May 2011.

Overall, the nation added 69,000 jobs in May, far short of the 150,000 jobs expected. Private industries added 82,000 jobs, while the public sector lost 13,000 jobs. Year-over-year, the nation has added 1,782,000 jobs or 1.4 percent to job totals. The nation’s unemployment rate ticked up to 8.2 percent in May from April’s 8.1 percent level.

“For now, the outlook for the nonresidential construction sector remains decidedly negative, with prospects for another near-term U.S. recession climbing materially in recent months,” Basu said. “While commercial construction and other key segments have gained a degree of momentum over the past two years, existing momentum would eventually be undone by another economic downturn.”

To view the previous spending report, click here.