The nonresidential construction sector added 11,800 net new jobs in December, representing nearly 10 percent of the nation’s jobs created during the month, according to an Associated Builders and Contractors (ABC) analysis of data released today by the Bureau of Labor Statistics. The nation’s overall construction sector added 30,000 net new jobs in December, a 0.4 percent month-over-month increase.

Construction easily embodies the most positive news emerging from today’s national unemployment report. Although both nonresidential building construction (-1,300 net jobs) and heavy and civil engineering (-700 net jobs) were down for the month, job gains were driven by nonresidential specialty trade contractors (+13,800 net jobs). Year-over-year construction employment is up by 210,000 positions, the most since September 2016.

The construction industry unemployment rate, which is available only on a nonseasonally adjusted basis, increased by 0.9 percentage points and now stands at 5.9 percent. The unemployment rate for all nonfarm industries—a figure that is seasonally adjusted—remained unchanged at 4.1 percent for the third consecutive month at a 17-year low. 
 
“Today’s overall job growth number fell short of expectations, but the construction employment numbers surprised to the upside,” said ABC Chief Economist Anirban Basu. “It is likely that some of this is due to ongoing rebuilding efforts after hurricanes and wildfires. We will have a better sense of this once state-level employment figures become available. To the extent that construction job growth, whether residential or commercial, is disproportionately concentrated in states like California, Texas and Florida beyond pre-disaster norms, one can infer that rebuilding efforts are responsible for at least some of the surge in construction job growth.

“That said, a strengthening U.S. economy is likely responsible for the bulk of construction job growth. Consumer and business confidence have been surging recently,” said Basu. “The recently passed tax cuts will add additional liquidity to the U.S. economy, which should translate into faster consumer and business spending growth. Positive wealth effects from housing and financial markets as well as an improving global economy are also helping to push the economy forward. Higher energy prices and bitterly cold temperatures are also stimulating investment among energy suppliers.  

“Despite the recent pickup in the pace of economic growth, interest rates remain remarkably stable,” said Basu. “Among other things, lower interest rates benefit both owners and developers of real estate. This should help translate into growth in activity in a number of private construction segments. As yesterday’s construction spending data indicated, there is also growing momentum in a number of public construction segments, a reflection of improving state and local government finances in much of the nation due in part to stronger residential markets and solid income tax collections. All of this suggests that the average contractor should be eagerly looking forward to 2018. Elevated contractor optimism is consistent with leading indicators like ABC’s Construction Backlog Indicator and Construction Confidence Index. Both of these indicators have been pointing to stronger construction spending and increased staffing levels for months.”