Increases, Though Slight, In Construction Employment

Contributed by Ron Johnsey, December 19, 2013

constructionDuring the Great Recession and the following financial meltdown, the construction industry took a hit. With demand for all classes of real estate faltering, this sector experienced many layoffs.

The good news is that the sector is starting to come back. The challenge is that the results are mixed.
A new analysis from the Association of General Contractors noted that, between October 2012 and October 2013, construction employment expanded in 215 metro areas, declined in 74 and was stagnant in 50. Furthermore, despite a recovering single-family market and increasing multifamily development in many metro areas around the country, construction employment remains below peak levels in 315 metro areas.

"October was a good month for construction employment in many parts of the country," said Ken Simonson, the association's chief economist. "It will take many more months of strong job gains before construction employment returns to peak levels in many parts of the country, however."

1 constr ma ind

The above table shows the top 20 metro areas for construction job gains in October 2013. Due to the way the BLS records and reports employment by industry in select markets, the job gain numbers also include mining & logging data for 11 of the top 20 markets.

In many cases, the contribution of these industries to the Construction, Mining, & Logging category is negligible but a few markets on the list – specifically, Minneapolis, Dallas, Denver and Midland, Tex. – are adding jobs due to oil and gas extraction through hydraulic fracturing (fracking). The following saw the largest number of construction jobs added in 2013:

  • Santa Ana (9,700 jobs, 13%)
  • Atlanta (8,500 jobs, 10%)
  • Boston (7,500 jobs, 14%)
  • Minneapolis (6,800 jobs, 11%)

The largest percentage gains occurred in:

  • Pascagoula, MS (35%, 1,500 jobs)
  • Eau Claire, WI (28%, 900 jobs)
  • Steubenville, OH (24%, 400 jobs)

The list of top construction employment gain markets contains several of the top metro areas for multifamily development as well. This table lists the top 10 MSAs for deliveries in 2014, from 2Q13 to 3Q13.

2 constr  2014 del

Earlier in the year, Axiometrics identified approximately 133,000 units that were already under construction and are set to deliver in 2014. Many of those units were in properties that had longer construction cycles, such as high-rise or wrap-style product in urban core locations. Construction on many of those units launched in 2012 or early 2013, but will not deliver until 2014.

During the past six months, the identified delivery count for 2014 increased from 133,000 to approximately 230,000. Many of the properties started in the past six months were in suburban locations with construction styles that allow deliveries to begin within the next 12-18 months.

This is good news for the construction industry, as apartment development continues driving employment growth. Early deliveries in Raleigh, Washington, DC and Seattle mean construction employment is already ramping up in these markets. Strong market fundamentals are also driving construction in Dallas, Austin, Houston, and Denver. We can look for this trend to continue as demand for apartments continues.