The Marcum Commercial Construction Index for the third quarter of 2021 reports that the construction industry’s recovery slowed during the summer in the face of labor shortages and rising material prices.
Nonresidential construction spending remains 10.7 percent below January 2020 levels but is just 1.3 lower than it was one year ago.
The index is produced by Marcum’s National Construction Services group.
“The nonresidential construction segment added 33,000 net new jobs in October 2021 and supports 46,500 more jobs than it did in October 2020,” said Anirban Basu, Marcum’s chief construction economist and author of the report. “But a majority of that growth has occurred in the heavy and civil engineering sub-segment, which is largely fueled by public financing. Nonresidential building employment, which is largely supported by private investment, is up only 4,700 positions over the past year.”
Dr. Basu points out that, as has been the case since the beginning of the pandemic, the residential sector continues to outpace nonresidential. “Residential construction employment has outpaced nonresidential job growth since the start of the pandemic. Of the 169,000 jobs the construction industry has added since October 2020, the residential sector accounted for 122,800 (72.6 percent) of them,” he said.
The recovery in construction employment has not occurred evenly across the country.
“Among the 20 largest metro areas in the U.S., the four with the greatest construction employment growth since the start of the pandemic – Minneapolis, Detroit, Chicago, and St. Louis – are all located in the Midwest. Aside from Houston, which has experienced the steepest employment decline in large measure because of dislocations in the energy sector, coastal MSAs like New York, Los Angeles, and San Francisco have fared the worst. These were among the communities most extensively shutdown during the pandemic’s early stages,” said Dr. Basu.
Inflation and sluggish supply chains continue to be issues for both the construction industry and broader economy. “The recent surge in energy prices strongly suggests that contractors, consumers, and other economic actors will be wrestling with inflationary pressures for much of 2022, and this trend is evident in the most recent Producer Price Index data which indicate that nonresidential construction input prices increased 20.2 percent from September 2020 to September 2021,” said Dr. Basu.
Source: Marcum
