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Nonresidential Construction Shows Vigor

Words: Dan KamysNonresidential construction employment increased in January, implying that the spending rise of 2007 will continue, according to Ken Simonson, chief economist for the Associated General Contractors of America (AGC). Simonson was commenting on two new economic releases, January payroll employment from the Bureau of Labor Statistics (BLS) and December construction spending from the Census Bureau.

"A 3.5 percent jump in employment of architects and engineers since January 2007 also suggests that nonresidential activity will remain positive," Simonson says. "Total construction employment fell by 27,000 in January, seasonally adjusted, but all of those losses occurred in residential building and specialty trades.

"Census figures for December show nonresidential construction spending jumped almost 16 percent from a year earlier, which could only have occurred with a sharp rise in employment," Simonson says. "The 'missing' employees work for specialty trade contractors — firms that entered the database as residential but are now busy installing wallboard, wiring and plumbing in schools, hotels and offices rather than houses."

Simonson says materials costs are accelerating again, particularly diesel fuel and steel.

"States have identified billions of dollars of infrastructure projects that are ready to go if the federal government will supply more funding," Simonson says. "If Congress is intent on passing a 'stimulus' bill, it should include infrastructure money to keep construction workers on the job and offset some of states' lost purchasing power."
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