Brief:

• ​The construction industry added 464,000 net new jobs in May, the largest monthly increase in construction jobs since the government began tracking employment in 1939 and a drastic improvement from April, which recorded the industry’s largest month-over-month job loss.
• While nonresidential construction employment lost more than 570,000 jobs on net in April, a total of 237,000 net new jobs were added in May, according to an Associated Builders and Contractors analysis of data released Friday by the U.S. Bureau of Labor Statistics.
• The data showed job gains in all three nonresidential subsegments: nonresidential building, nonresidential specialty trade contractors and heavy and civil engineering.

 Insight:

“One way to look at this stunning jobs report is to suggest that economists missed the mark by approximately 10.5 million jobs,” said ABC Chief Economist Anirban Basu in a press statement. “Economists polled by Dow Jones had forecasted a decline exceeding 8 million jobs. Instead, the economy added a bit more than 2.5 million jobs. It’s also possible that economists missed the mark by two to four weeks, as the economy opened up faster than most economists expected and consumers have been far more willing to engage the economy than many thought possible given the ongoing personal and public health risks presented by COVID-19.”

The economy beginning its recovery sooner and more dramatically than anticipated is “purely good news” for contractors, he said, as fewer projects are likely to be postponed or canceled.

“Combined with rising contractor confidence, as indicated by ABC’s Construction Confidence Index, this will also help accelerate the recovery of state and local government finances as tax collections surge, ultimately resulting in more monies available to finance infrastructure,” he added.

Nevertheless, state and local government finances are facing major challenges, and many local government workers lost jobs in May.

“Make no mistake — these remain treacherous times,” said Basu. “Though economic recovery may have begun, there is still the possibility of a resurgence in infections as stores, restaurants and other businesses reopen.”

Moreover, while unemployment dipped to 13.3% in May, it remains elevated and May 2020 nonresidential employment was 286,000 jobs lower compared to May 2019.

“Labor force participation has been rocked in recent months, and it may be the case that many dislocated workers, including construction workers, will remain out of the labor force for an indefinite period,” he said. “There is also a presidential election later this year, which will create further uncertainty for economic decision makers, including among those who purchase construction services.”

The new numbers follow a month of historic job losses for the construction industry, which lost 975,000 jobs in April, as contractors experienced less demand for their services amid the pandemic. This drop represented approximately 13% of the country’s construction workforce, said Associated General Contractors of America.

This article was originally written by Jenn Goodman and appeared here.