There’s more information and data suggesting the growth in the U.S. economy is being led by the construction industry, according to Construction News Online.
In February, construction added 48,000 jobs, second only to professional and business services among major U.S. industries along that dimension. February’s construction employment increase represents the largest monthly increase since March 2007, which preceded the recession by nine months. On a year-over-year basis, U.S. construction firms have added 140,000 jobs or 2.5% to industry totals.
While the industry has not fully recovered, the construction industry’s unemployment is still at 15.7%, considered high by many experts. However, last year, the unemployment rate was 17%.
Recently, the American Institute of Architects’ Architecture Billings Index (ABI) recently reported its strongest growth since November 2007. In January, the ABI stood at 54.2, up from 51.2 in December. (Any score above 50 indicates an increase in architectural billing, which ultimately translates into a growing number of construction starts.)
CFOs participating in the most recent CONFINDEX survey generally provide confirmation that construction’s recovery is positioned to accelerate. Every sub-index rose during the first quarter survey relative to the final quarter of 2012. The Overall Confidence Index rose 13.2% to 129, its highest level in precisely two years (March 2011: 131). The Business Conditions Index surged 19.5%, from 123 last quarter to 147 during the current quarter. The Financial Conditions Index increased to 115, an increase of 8.5% from last quarter. The Current Confidence Index is up 10% to 121. Perhaps most importantly, the 2013 Outlook Index jumped 17.8%, from 118 to 139. All of this serves as confirmation of the notion that construction appears poised to outperform previously established expectations.
The most recent CONFINDEX survey also indicates that many construction executives have become less concerned about the level of demand or the amount of financing available for construction projects and more concerned about prospective skills shortages. In the first quarter survey, skills shortages in construction represented the single most prevalent concern among CFOs, with fully 48% of survey respondents reporting that they are either very concerned (36%) or highly concerned (12%) regarding skills shortages. Another 39% are watching with some concern while 11% are not concerned at all. CFOs report that many skilled workers have left the industry to pursue jobs in other industries and are unlikely to return. While construction languished during the early stages of the ongoing economic recovery, other industries began to recover in more timely fashion. As a result, much industry talent was lost, much of it permanently. Other impactful issues include the aging of the workforce, expected retirements, and a lack of demonstrated interest in construction among younger labor force participants.
And how will public policies impact construction? That’s of some concern too.
During the first quarter, 30% of survey respondents reported that they are very concerned (22%) or highly concerned (8%) regarding the way in which various public policies will impact construction. However, that is down from 46% in the fourth quarter of last year, implying that Washington’s ability to navigate past the fiscal cliff provided some degree of relief from anxiety. The majority of respondents are watching the policymaking environment with some concern (47%) while 16% are not concerned at all.