Summary 

"The risk of recession is expanding rapidly," said Associated Builders and Contractors Chief Economist Anriban Basu.  "Yesterday's release regarding construction spending and today's release regarding employment both reflect the ongoing slowdown in construction activities.  This comes as little surprise as a number of factors, including policy rifts, have had a chilling effect on business confidence, therey slowing investment.

"In addition, the leading indicators are not positive with respect to construction employment,” Basu said. “Heavy and civil engineering, which had been a source of job growth, is now shedding jobs.  Because these workers are often involved during the early stages of a project, job loss among this group signals slowing activity among those who tend to work during ensuing phases, including specialty trade contractors.  Specialty trade contractor employment is also now on the decline. 

“In contrast, building foundation and exterior contractors added 14,300 jobs for the month and 4,800 jobs from the same time last year on a non-seasonally adjusted basis,” said Basu. “Site preparation contractor employment grew by 4,800 jobs in August and 8,500 over the past twelve months. This suggests that some semblance of construction momentum remains.

“The question is whether the slowdown in overall economic activity since March will ultimately reverse this residual nonresidential construction momentum,” Basu said. “The outlook is not positive. Financial markets are responding poorly to today’s data release. Credit availability is likely to tighten further due to the growing perception of economic risk. None of this is good for construction and the next several months are shaping up to be challenging ones for the industry.”