Last Friday showed poor results for the job market, but economists believe this is just a momentary disruption due to high gas prices and Japanese supply problems.But construction, a key sector that has lagged the overall job market, is likely to continue to do so even when job growth picks up again.
Construction's malaise could hurt overall gains, even if the economy rapidly regains its pre-May pace of about 200,000 more jobs a month. Home building ripples through such industries as appliances and furniture.
The construction industry will continue to experience double-digit unemployment rates for a long time. Construction firms added 2,000 jobs in May, while all U.S. payrolls grew by 54,000. Yet, while all employers added 1.8 million jobs since February 2010, construction lost 4,000. Its payrolls of 5.5 million are down 2.2 million since 2007.
Construction’s 16.3% jobless rate is also down from 22% a year ago. That's because many discouraged workers stopped looking or switched to trucking or manufacturing.
The problem: Housing starts are anemic due to tight lending standards and foreclosures that swell inventories and depress prices, says economists.
Public construction that propped up the industry when commercial work disappeared in the recession is ending as the federal stimulus winds down and states slash budgets.
Hospital, university and utility projects are rebounding. Office and retail work should tick up in 2011.But the gains won't offset public cutbacks. One economist cut his estimate for 2011 industry job growth to 100,000 from 250,000.
One company had to lay off the 150 workers he hired when he won $100 million in stimulus-funded highway projects. Now, the company worries that cuts to the Highway Trust Fund by Congress will force more layoffs.
There's progress in pockets. Princeton Properties in Lowell, Mass., is developing 320 apartments, its first since 2007. As young people get jobs, many leave parents' homes.
Rebuilding is needed after tornadoes in Tuscaloosa, Ala., and Joplin, Mo. One construction company in Tuscaloosa is repairing a shopping center and rebuilding an office building, among other work, leading to three hires.
