Modest Employment Gains in April as Industrial Construction Starts Take Off

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Researched by Industrial Info Resources (Sugar Land, Texas)--The mild winter experienced recently in the U.S. has had some unforeseen consequences in terms of unemployment numbers and industrial construction starts. The overall unemployment situation in the U.S. has been improving gradually for the last year, but the rate at which it has improved has slowed recently, whereas industrial construction starts were robust through the prime construction periods during the last year, but slowed momentarily during the winter months before picking up earlier than expected. For the second straight month, the new jobs numbers have been slower than expected, while industrial construction starts have been taking off.

In April, only 115,000 jobs were created in the U.S., according to the Bureau of Labor Statistics, but this was enough additional jobs activity to drop the national unemployment rate slightly from 8.2% to 8.1%. Job gains were seen in the manufacturing, health care, leisure and hospitality, retail and professional and business services sectors for the month, while the transportation and warehousing sector saw a loss of 17,000 jobs, and the ever-struggling construction sector, where unemployment remains at the 14.5% mark, lost another 2,000 jobs. Economists are speculating that the mild winter caused companies to hire earlier than previously anticipated; now, when they would more traditionally be hiring, they are not.

The weak construction sector continues to get hammered with a lack of available jobs. The only two construction sectors that saw jobs gains were the heavy and civil engineering construction sector, which gained 3,300 jobs, and the residential specialty trade contractors sector, which saw 6,300 jobs added for the month. These gains were offset by jobs reductions in the residential building, nonresidential building, and nonresidential specialty trade contractors sectors, which, combined, managed to drag down the total jobs created enough to see a negative result for the month for the entire construction sector.

The industrial construction side of the equation is where things really took off in April. Just under 800 capital or maintenance projects began construction activities in the U.S. during the month, at a total cost of $35 billion. This amount is double what occurred in March. A large portion of this spending was the start of construction on the $14 billion nuclear power plant in Georgia, a project that recently received final approval to move to the construction stage. However, even taking that single project out of the equation, an additional $21 billion in construction spending occurred during the month, which would still exceed March's total construction starts by $6 billion.

The Power Industry was the chief spender during April, thanks mainly to that single massive project. All total, the Power Industry saw 87 capital or maintenance projects worth an estimated $21.4 billion begin construction activities during the month. Even excluding the $14 billion nuclear project in Georgia, the Power Industry saw some $7 billion in construction start activity for the month, which came close to doubling any other industry. The Industrial Manufacturing Industry saw the second-highest total construction starts in April, with 47 capital or maintenance projects worth an estimated $3.6 billion. The Oil & Gas Transportation Industry also had a solid month when it came to construction starts, with 29 projects worth an estimated $1.8 billion on its plate.

The construction starts were spread all over the country. The Southeast region, thanks to that single Georgia power project, topped the charts in terms of total spending for a region in April with 100 capital or maintenance projects beginning construction activities at a total cost of $15.9 billion. The Southwest region also saw some significant construction opportunities, with 176 capital or maintenance projects worth $4.4 billion beginning construction, while the West Coast region contributed 62 projects worth an estimated $3.7 billion.

April may have been an anomaly in terms of spending, thanks to that single massive project taking place, but spending has been on the rise for the last couple of months. While hiring has slowed down, there is the possibility that it will pick up as the country braces for the summer months. Spending should continue to improve throughout the summer as it is prime construction time, and that should help improve the unemployment situation over time. Nothing will happen overnight, but the gains will be gradual and they will add up when the year is all said and done.

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.