Association Officials Noted that Supply Chain Problems and Materials Price Increases are Impacting Demand for Nonresidential Projects, Prompting Some Owners to Delay or Cancel Projects
The construction industry gained 22,000 jobs between August and September as nonresidential construction firms added employees for the first time in six months, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said nonresidential construction has been affected by the widespread supply chain problems, which are causing owners already uncertain about future demand for commercial space to delay or even cancel some projects.
“While it is refreshing to see job gains in both residential and nonresidential construction, nonresidential building and infrastructure employment remains far below its pre-pandemic peak,” said Ken Simonson, the association’s chief economist. “It will take more than a few months of gains to match the overall economy.”
Construction employment in September totaled 7,447,000, an increase of 22,000 since August. However, industry employment remained 201,000 below the pre-pandemic peak set in February 2020.
The nonresidential segment, comprising nonresidential building and specialty trade contractors plus heavy and civil engineering construction firms, added 18,600 employees in September. But nonresidential employment is 281,000 below the February 2020 level, as the sector has recovered only 56 percent of the jobs lost in the first two months of the pandemic.
Residential construction–including building contractors such as homebuilders, along with residential specialty trades–added 3,600 employees in September. Residential employment tops the February 2020 mark by 80,000.
Simonson cited an unending series of supply-chain bottlenecks, as well as extreme price increases and long lead times for a variety of construction materials, as threats to further growth of nonresidential construction. He said he had heard about an increasing number of project owners deciding to postpone projects because of excessive cost increases and lead times. He noted that the association has again updated its Construction Inflation Alert, a guide to inform owners, officials, and others about the cost and supply-chain challenges.
Association officials urged the Biden administration to remove tariffs and import quotas on a range of key construction materials to help address supply chain disruptions. They added that Congress can help offset declining nonresidential demand for construction by passing the bipartisan infrastructure bill that has already cleared the Senate.
“Both parties in the House should make passing the infrastructure bill a top priority because it is the best way to create new construction careers and make our economy more efficient,” said Stephen E. Sandherr, the association’s chief executive officer. “If the President acts to address supply chain problems and Congress passes the infrastructure bill, construction employment is likely to surge.”