The Improving Outlook for Construction Jobs

March 15, 2012 | Mike Spychalski, CAIA, Vice President

This week’s chart shows the month over month change in construction jobs and the month over month change in annualized housing starts in the U.S. (based on rolling six month averages for each). As the chart illustrates, the steep drop off in housing starts that began in late 2006 resulted in significant job losses in the construction sector starting in mid-2007. The construction sector, which added approximately 1.1 million jobs from January 2003 to December 2006 (an average of about 24,000 jobs a month), lost approximately 2.1 million jobs from January 2007 to December 2010 (an average of about 44,000 jobs per month) according to ADP payroll data. However, over the past several months, a positive trend has started to emerge in new housing starts. This positive trend in housing starts has largely been driven by an increase in construction of multifamily housing units (i.e. apartment buildings) due to the increased demand for apartments (as a result of many households transitioning from homeowners to renters).

While this improvement is a welcome development in the housing market and construction sector, the recent increase in construction jobs is nowhere close to the kind of growth required to make up for the lost construction jobs during the recession and its aftermath. We have had an increase in construction jobs for five consecutive months with approximately 56,000 construction jobs added in the U.S. At this pace, it would take over 15 years to recover all the construction jobs that were lost from January 2007 to December 2010.