Economy

Weak Jobs Report Shows Slowing of Construction, Manufacturing Employment

March 9, 2019

A much weaker than expected jobs report showed that only 20,000 jobs were added in the U.S. last month. The unemployment rate was 3.8 percent, dipping from 4.0 percent in January, according to the latest report from Commerce. Average earnings rose 0.4 percent in February for a year-over-year gain of 3.4 percent.

In the construction sector, employment decreased by 31,000 jobs in February. Residential construction employment fell by 10,900 jobs last month after increasing by 22,500 jobs in January and declining by 900 jobs in December. The Associated General Contractors of America attributed the decline to extreme weather conditions across most of the nation last month. AGC estimates 2.9 million people were employed in residential construction in February.

“The decline in construction employment in February follows an oversized increase in January of 53,000 employees,” said Ken Simonson, the association’s chief economist. “That suggests contractors may have been able to bring workers on board sooner than normal and had less need to hire in February than usual, even if lousy weather conditions hadn’t stalled some projects.”

Construction demand continues to be strong, but a shortage of experienced workers continues to frustrate hiring by contractors.

“There were fewer unemployed construction workers last month than any prior February in the 20-year history of this series, down 144,000 from a year earlier,” said Simonson. “Contractors are scrambling to find workers, despite offering pay that is well above the private sector as a whole.”

Construction employment totaled 7.42 million in February, up 3.1 percent from February 2018. The average hourly earnings for construction workers increased 3.1 percent from a year ago to $30.45, more than 10 percent higher than the private-sector average of $27.66 per hour, said AGC.

New Job Creation Muted in Manufacturing Sector

New job creation in the manufacturing sector was at a low of 4,000 after increasing by an average 22,000 jobs per month in the past 12 months.

The National Association of Manufacturers said weather may have impacted total job growth in February, and economists were expecting a pullback after a strong January.

“The consensus estimate was for around 180,000 jobs created, though not the 20,000 the Bureau of Labor Statistics reported,” said NAM chief economist Chad Moutray. “I would not be surprised to see an upward revision in the next release or, at a minimum, a sharp rebound.”

Moutray said not to read too much into February data as the market continues to be strong overall. “There were 12,834,000 manufacturing workers in February—the most workers in the sector since December 2008—with almost 1.4 million employees added since the end of the Great Recession,” he said.

The tight labor market is a concern for the manufacturing sector, according to the most recent NAM Manufacturers Outlook Survey. Although firms are optimistic in their business outlook, attracting and retaining workers was cited as the industry’s biggest concern for six consecutive quarters.

The Alliance for American Manufacturing said the minimal gain in February may be just a blip, but that an infrastructure bill would be a boost for manufacturing firms. “Manufacturing barely continued a positive run of job gains in February,” said AAM President Scott Paul in a statement. “While it’s too early to tell whether this is a trend or a blip, there are policies that can boost factory jobs. Infrastructure investment, which has broad bipartisan appeal, would be a good start.

“The trade deficit with China may also be dampening the full potential of American manufacturing. This makes a tough, enforceable deal with China even more important. We urge the administration not to settle for the sake of expediency.”