Dec 27 2006 12:39PM | Permalink | Email this | Comments (0) |
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The decline in total construction spending since June has not stopped contractors from hiring in the South Atlantic, Gulf Coast, Rocky Mountains and Pacific Northwest. Construction job counts compiled by state Labor Departments show significant hiring in these states since February when activity peaked in the housing market.

The sum of state reports shows 131,000 new construction jobs since February while the Bureau of Labor Statistics (BLS) estimate is a decline of 36,000 jobs in the US. The BLS estimates usually turn out to be closer to the final job estimates than the sum of the state counts. But not always. BLS occasionally shots itself in the foot by over-tinkering with seasonal adjustments. This time there is enough evidence from cuts in materials prices and materials production to put more trust in the BLS estimates. Nonetheless, there is risk that the reported national construction job total may be underestimated in recent months.

Even if the sum of state job estimates is 166,000 too high, the relative strength and weakness of various regions is very clear.

Texas added 35,800 jobs and Louisiana added 7,200. The growth drivers are hurricane rebuilding, expanded oil and gas exploration and foreign immigration. None of the three drivers show any sign of reversing soon.

Arizona, Nevada and Utah added 37,600 construction jobs in the same period. While homebuilders had had to cut back in these states until they can sell their surplus inventory, other builders are expanding to catch up with the nonresidential facility needs of a rapidly growing population. 6,900 more workers were hired in the other Mountain States.

California experienced the largest decline in construction jobs with 19,100 fewer workers in November than in February. Nonresidential facility needs are simply not as intense in California as in the Mountain states. But this may change soon with the recent ballot approval of about $50 billions of new public projects.

In the overall sluggish Midwest, Illinois, Iowa and Minnesota added 12,500 new construction jobs. Credit the price of corn and their more diversified economies compared to Michigan, Ohio and Indiana.