By Bernard M. Markstein, Ph.D.
Nationally, the construction employment picture has continued to improve from last year. The not seasonally adjusted (NSA) construction unemployment rates for the country and 45 states
were down in August on a year-over-year basis
. For the first eight months of the year, construction added 113,000 seasonally adjusted (SA) jobs. At the same time, NSA jobs increased by 221,000 from August 2014 to August 2015.
When looking at the monthly movements
, it must be remembered that these are NSA unemployment rates
. Hence they tend to have a seasonal pattern. This is the reason that year-over-year comparisons of the NSA rates are preferred. Thus, when looking at the monthly rate movements, some care should be taken.
For the last 15 years, August and September have been transition months for the national NSA construction unemployment rate. Roughly half the time the rate increases from the previous month. This August, the rate rose 0.6 percent. Thus it is no surprise that 44 states saw their estimated NSA construction unemployment rate increase from July.
Despite the rise in rates, all state construction unemployment rates
were under 10 percent for the third consecutive month. The NSA construction unemployment rate for four states—Arkansas, Ohio, Utah, and Wisconsin—was unchanged from the previous month. Two states—Georgia and Indiana—experienced a small decline in their rate.
This improvement in construction employment has been driven by expanding construction activity. As of July, SA total construction spending has increased for eight months in a row. July year-to-date NSA construction spending was up 9.3 percent from the same period in 2014. However, although heavy engineering (non-building) construction spending has risen for five consecutive months, it is down 3.7 percent on a year-to-date basis compared to the same period last year. Surprisingly, it is nonresidential building construction that is surging—up 19.7 percent year-to-date. That outstrips residential construction spending, which is up 10.4 percent year-to-date.
View states ranked by their construction unemployment rate
View states ranked by their year-over-year improvement in construction employment
View each states' unemployment rate for all industries
The Top Five States
The five states with the lowest construction unemployment rates
in order were:
1. North Dakota
4. Nebraska and South Dakota* (tie)
* Unemployment rate is for construction, mining and logging combined
Four of the top five states—North Dakota, Wyoming, Hawaii, and South Dakota—were also in the top five in July. North Dakota held on to its number-one position from July based on revised data (previously reported as number two in July). Although North Dakota remains in the group of the five states with the lowest estimated construction unemployment rates, it was also one of the five states whose year-over-year construction unemployment rate increased (the other four were New Mexico, Oklahoma, South Dakota and West Virginia). Developments in the energy sector were a major factor in North Dakota’s low rate a year ago as well as its increase on a year-over-year basis. While the state’s continued construction unemployment rate remains relatively low, it is largely due to work was already underway in the oil fields as energy prices have dropped. The tendency for many of those who have lost their jobs in construction to move to other states (often their home state) in search of work has also helped keep North Dakota’s rate low.
Wyoming moved into second place from fifth place based on revised data (it was previously reported in first place for July). Like North Dakota, Wyoming’s economy is strongly affected by the energy sector. Also like North Dakota, Wyoming has a strong reliance on agriculture and government (mainly military bases). For now, these two sectors are helping to cushion the blow of lower energy prices for both states.
Hawaii kept its third-place position based on revised data for July (tied with Maryland). It had previously been reported in fifth place in July. Maryland fell to tenth place in August.
Fourth place was a tie between Nebraska and South Dakota. In July, Nebraska had the seventh lowest estimated construction unemployment rate based on revised data (previously reported as eighth lowest). South Dakota dropped from second lowest based on revised data (previously reported as third lowest). Both states’ economies depend heavily on agriculture, which has boomed in recent years. However, the recent rise in the foreign exchange value of the dollar will pose a challenge to that sector going forward.
View the top five and bottom five states ranked by construction unemployment rate
The Bottom Five States
The five states with the highest construction unemployment rates
(from lowest to highest) were:
48. Rhode Island and West Virginia (tie)
50. New Mexico
Three of the five states with the highest estimated construction unemployment rates in August—Mississippi, Rhode Island, and West Virginia—were among the five highest in July. New Mexico, with the highest construction unemployment rate in August, had been near the middle of the pack in July, tied for 27th lowest rate with Indiana and Oregon. New Mexico also suffered both the largest monthly and year-over-year increase in its construction unemployment rate. Undoubtedly, the downturn in the energy sector was a major contributor to this jump in construction unemployment.
Rhode Island and West Virginia were tied with the second highest construction unemployment rate. This was a slight improvement for West Virginia, which had the highest rate the previous two months. Rhode Island maintained its second highest rate status based on revised data (previously reported as tied for fourth highest in July).
Both states experienced an increase in their monthly unemployment rates (0.8 percent for Rhode Island and 0.3 percent for West Virginia). However, Rhode Island had a sharp drop in its year-over-year construction unemployment rate (down 3.1 percent) ranking it third among the states with the largest year-over-year decline. Further, Rhode Island’s rate has been decreasing on a year-over-year basis for over two and a half years.
West Virginia on the other hand suffered an increase in its rate from a year ago (up 1.2 percent), the second highest increase among the states. Although from January 2013 through January 2014, West Virginia’s construction unemployment rate declined each month on a year-over-year basis, there have been only intermittent declines in the rate since then. Starting in March of this year, the year-over-year rate has increased every month.
The difference in the movement of the two states’ construction unemployment rates is a result of the difference in the forces driving their economies. West Virginia’s economy is strongly tied to the energy sector—coal in particular. Coal has suffered significantly from lower oil and natural gas prices while also facing stiffer air pollution regulations, which have disproportionately hurt the coal industry. West Virginia also leans heavily on government employment, which has fallen sharply in the last few months mainly due to falling local government employment (down 7.9 percent year-over-year in August using NSA data).
Rhode Island derives more strength from manufacturing (roughly in line with the national economy), which has improved markedly over the past few years. Other areas of relative strength for Rhode Island are education and health services, financial services as well as professional and business services. Meanwhile the state benefits from lower energy prices.
Mississippi retained its position of fourth highest rate based on revised data (previously reported as third highest in July). Arizona had the fifth highest rate compared to tenth highest in July. Although Arizona’s estimated construction unemployment rate was down 1.2 percent from a year ago, it rose 1.3 percent from July, the seventh largest monthly increase among the states.
Georgia, which had the second highest rate in July (tied with Rhode Island), improved to ninth highest. It also had the distinction of the largest year-over-year decrease in its construction unemployment rate.
Connecticut, which had the fifth highest rate in July based on revised data (previously reported as tied with Alabama and Rhode Island for fourth highest), moved to seventh highest. It also experienced a significant drop in its construction unemployment rate from a year ago.
View regional breakdowns of the construction unemployment rates of each state
To better understand the basis for calculating unemployment rates and what they measure, see the article Background on State Construction Unemployment Rates.