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49 States See Fall in Monthly Construction Unemployment Rate


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Associated Builders and Contractors (ABC) launched its state-by-state economic analysis earlier this year with the release of economist Bernard Markstein's analysis of construction's contribution to each state's gross domestic productMarkstein also compiles the construction unemployment rate of each state, each month. Unique to ABC, Markstein's analysis of the construction job market and unemployment rate in each state for April is below. 
 
This analysis is produced monthly in addition to ABC's existing national economic data and analysis. Background on how the data was derived and Markstein's methodology is available on ABC's website. Markstein is also available for an interview to provide further analysis.
 
Overview
 
The United States economy, along with the construction economy, struggled through the first quarter as the nation was battered with unusually harsh weather. As of the May 29 U.S. Department of Commerce report, real (inflation-adjusted) gross domestic product (GDP) fell 0.7% at a seasonally adjusted annual rate (SAAR). The June 1 construction spending report showed that nominal (current) dollar construction spending was down 0.5% (SAAR), but on a not seasonally adjusted (NSA) basis was up 3.7% compared to first quarter 2014.
 
Indications show that with better weather, the economy and construction are rebounding from that poor performance in the first quarter. For the first four months of the year, NSA construction spending was 4.1% higher than the same period a year ago. Among the big gainers in construction spending for the first four months of the year compared to the same period in 2014 were manufacturing (+42.0%), lodging (+15.9%), office (+18.5%), commercial (16.7%) and multifamily (+26.3%).
 
With the combination of improving weather and a rebound from a dismal first quarter, hiring in construction has improved. The Bureau of Labor Statistics (BLS) reported that April seasonally adjusted (SA) construction jobs for the United States increased by 45,000 and that year-to-date SA construction jobs were up 108,000. Additionally, NSA construction employment has increased by 300,000 on a year-over-year basis.
 
The April NSA construction unemployment rate for the country and the estimated construction unemployment rates for 49 states declined from their respective March rates. Only Hawaii, whose unemployment rate includes mining, rose from its March estimate. The year-over-year change in the construction unemployment rates provides an even better indication of how construction industry employment is progressing. Construction unemployment rates for 45 of the 50 states and the U.S. rate were down in April 2015 from April 2014. 
 
The Top Five States
 
The five states with the lowest construction unemployment rates (the construction and mining unemployment rates where noted below) from highest to lowest were:
  •     Wyoming
  •     South Dakota*
  •     Nebraska*
  •     North Dakota
  •     Utah
* Includes construction and mining unemployment rate
 
The top four—Wyoming, South Dakota, Nebraska and North Dakota—are in the same geographic area, with fifth-ranked Utah nearby. Wyoming, Nebraska, North Dakota and Utah were also among the five states with the lowest construction unemployment rates in March. Note that Montana, which would fit in geographically with the top four, had the eighth lowest construction unemployment rate.
 
Wyoming took over first place from Nebraska, which fell to number three. This was an exchange of their March rankings mainly due to Wyoming's larger drop in its construction unemployment rate rather than poor performance on Nebraska's part.
 
Second place South Dakota moved up from a revised fourth place in March (originally estimated as sixth place) sending North Dakota to fourth place in April. Finally, Utah held its fifth place rank between the two months.
 
The Bottom Five States
 
  •     West Virginia
  •     Georgia
  •     California
  •     Rhode Island
  •     Connecticut
Among the states with the five highest construction unemployment rates in April, four of the five remained the same as in March, though in a different order. West Virginia went from third highest in March to highest in April. It was also the only state in the bottom five that saw its construction unemployment rate increase on a year-over-year basis.
 
The West Virginia economy has been struggling in recent months as the state has suffered setbacks in one of its major industries—coal. That has been compounded by the drop in energy prices, adversely affecting its natural gas industry. Also, as West Virginia has become more export oriented, the rise in the foreign exchange value of the dollar has been another drag on its economy. In terms of construction, from April 2014 to April 2015, West Virginia had the greatest loss of construction jobs of any state both on a percentage and absolute number basis.
 
Georgia went from fifth highest construction unemployment rate in March to second highest in April even as it experienced a solid 2.2% drop in that rate from April 2014. Georgia's decline in the rankings is less about a poor economy (although its construction unemployment rate is in the low double digits) than that other states improved more.
 
This also appears to be the case for California whose construction unemployment rate went from tied for tenth highest in March to third highest in April. Again, although that rate fell both on a monthly and a year-over-year basis, it remained in the low double digits.
 
Rhode Island improved from the worst construction unemployment rate in March to fourth worst in April. New Jersey, which was fourth worst in March, also improved three notches to seventh worst as its April rate fell to just below 10%.
 
Connecticut was another state moving up three places from second worst in March to fifth worst in April. Both of these New England states, Rhode Island and Connecticut, have suffered from a harsh winter and a slow recovery from the recession, but appear to be showing some signs of life.
 
Conclusion
 
Most states are showing improvement from a difficult first quarter. This results in some relatively large percentage increases in some of the numbers (e.g., April SA total housing starts jumped 20%). However, when taking a longer-term overview and averaging out those fluctuations, the economic picture is one of slow but steady advancement. It seems unlikely there will be any sustained surge in activity anytime soon, but no serious backsliding either. Although greater growth would be preferred, slow and steady beats a decline in activity.
 
Read more on ABC's website

 

Associated Builders and Contractors (ABC) is a national construction industry trade association representing nearly 21,000 chapter members. Founded on the merit shop philosophy, ABC and its 70 chapters help members develop people, win work and deliver that work safely, ethically, profitably and for the betterment of the communities in which ABC and its members work. Visit us at www.abc.org.

 

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