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Drop in Construction Unemployment Rate Suggests Workers are Leaving Industry, Threatening Later Growth; Officials Call on Federal, State Governments to Promptly and Fully Fund Infrastructure Projects

Construction employment remained mired in a five-year-long slump as the industry shed another 9,000 jobs from May to June, according to an analysis of new federal employment data released today by the Associated General Contractors of America. Association officials said that declines in public sector construction activity will negate any pickup in private sector demand unless Congress and states promptly and fully fund needed infrastructure spending and streamline the approval process for public projects.

The industry unemployment rate fell from 20.1 percent a year ago to 15.6 percent in June 2011, said Ken Simonson, the association’s chief economist. However, Simonson noted that the June 2011 employment total of 5,513,000 was only 2,000 higher than in June 2010 and more than 2.2 million, or 29 percent, below the peak in April 2006.

“Even with the drop in the industry unemployment rate, the lack of hiring means that people are leaving construction, not going back into it,” Simonson said. “That will make future expansion all the more difficult.”

The construction economist noted that employment in heavy and civil engineering construction—the segment that had previously added jobs as a result of federal funding for stimulus, military base realignment and Gulf Coast hurricane protection projects—shrank for the second month in a row, by 1,800 jobs, although the June 2011 total was 23,000 jobs or 2.8 percent higher than a year earlier. Residential building and specialty trade employment dropped a combined 9,900 jobs in June and 35,000, or 1.7 percent, over the past 12 months. Nonresidential building and specialty trade contractors added a net 2,700 jobs for the month and 16,200 jobs, or 0.6 percent, over 12 months.

“In the second half of 2011, there should be a strong gain in apartment and manufacturing construction; some improvement in construction of hospitals, distribution centers and hotel renovations; and ongoing strength in power and energy projects,” Simonson predicted. “But job creation in these niches may be swamped by further declines in public construction and continued weakness in single-family homebuilding, office and retail work.”

Association officials said that it is vital for public officials at all levels of government to renew commitments to maintain and update infrastructure. The construction association also reiterated its call to streamline approvals of public works.

“The announcement yesterday of the outline of a long-delayed federal highway and transit funding authorization, with a quicker approval process, is an encouraging note, but the proposed funding level is grossly inadequate,” said Stephen E. Sandherr, the association’s chief executive officer. “Meanwhile, a budget stalemate in Minnesota has already led to a halt in state highway projects there, adding to the unacceptably high loss of construction jobs. Other road, school and public works projects are at risk of shutting down soon unless government officials act promptly.”