Construction Employment Remains a Bright Spot, Even if it is Slowing a Bit

construct 2016-2-xlsx

Construction employment even though slowing slightly remains a bright spot in the US economy.  Construction employment growth was approximately 3.7%, 5% and 4.8% for 2013, 2014 and 2015 respectively.  Over the three year window construction employment growth grew about 4.9% per year.  That is the good news, the somewhat less good news is construction employment is slowing.

Year over year construction growth peaked in Dec 2014/January 2015 which is abnormal given the typical winter season construction slowdown in the US.  January 2016 showed 4.45% YoY growth in construction employment, which is pretty great given an economy that is growing at around a 2% annual rate and manufacturing employment growth of under 0.5% for January 2015 to January 2016.  4.45% YoY growth for January 2016 looks worse than it really is when you consider how strong employment was in early 2015.  For the period of July 2014 to May 2015 construction employment growth averaged about 5.5% YoY, and Dec 2014 to Feb 2015 averaged 6.2%.  So January 2016 is being compared to a huge January 2015.  While January 2016 shows 4.45% YoY which is slightly less than the 2015 YoY average of 4.84% growth, January growth exceeds the growth average of the prior 6 months which was a bit lower at 4.16%.

Given the high bar set in 2015 there is no indication that US construction is coming off the rails.  Even though manufacturing and energy are slumping badly, construction employment is an indicator that a recession may be a ways off.  February and March will provide a much better picture of whether a construction slump is also in the offing for 2016.

Below I'm including another view of US construction employment which does show a bit of slowdown in 2015 over 2014, but has yet to show any indication that employment is about to fall out of the growth channel in a significant way.

construct 2016-2-xlsx