According to Reuters, the construction sector’s economy may not reach bottom until sometime next year. With one in five U.S. construction workers out of a job, prospects remain dim amid ongoing cuts in construction spending, a decline in nonresidential projects, and concerns that government stimulus will take months to have any measurable effect.

“The construction industry is in a near depression,” said General President Terry O’Sullivan of the Laborers’ International Union of North America, which notes that the construction unemployment rate, at 21.4 %, is the highest of any sector.
 Construction employment fell by 104,000 jobs in February, marking the 20th consecutive monthly decline, and is down by 1.1 million since the start of 2007. While construction accounts for one in 20 jobs, one-fifth of all job cuts have come in this sector.

“We may well see negative construction employment figures for the rest of this year,” said Ken Simonson, chief economist of the Associated General Contractors of America.

He cited recent double-digit declines in nonresidential building starts and in highway and public work construction. Local school projects, which in recent years have had three or four bidders, now have 25 to 30 contractors putting in bids.

Construction employment peaked at 7.7 million two years ago, and it will take years to revisit those levels, Simonson said.

Until last year, relative strength in nonresidential construction had offset weakness in housing and absorbed some of the job losses from homebuilding, said Kermit Baker, Chief Economist of the American Institute of Architects (AIA).

“Now that nonresidential has softened, we’re seeing no place to hide,” he said.

Source: Reuters