Unemployment Situation Takes Hit in May Despite Industrial Construction Starts Topping $34 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--After almost a year of positive news on the jobs front, the unemployment rate hit a snag in May, increasing for the first time in eleven months. Economic issues in both Europe and China have contributed to a general economic slowdown in the United States, which contributed to the lower than expected jobs numbers. The U.S. economy only grew by 1.9% in the first quarter, much lower than the 3% growth seen in the final quarter of 2011, despite the mild winter and significantly improved industrial investment during the first five months of 2012. The unemployment rate increased to 8.2% in May as only 69,000 new jobs were created during the month despite the continued boom in industrial construction starts as another $34 billion worth of projects began construction activities during the month.

Gains were seen in the manufacturing sector which added 12,000 jobs, the transportation and warehousing sector which added 35,600 new jobs and the education and health services sector that added 46,000 jobs. However these jobs gains were offset by a 28,000 jobs loss in the construction sector, primarily due to significant declines in jobs within the heavy and civil engineering construction sector and the specialty trade contractors sector, as well as declines in jobs within the professional and business services sector, the leisure and hospitality sector and a decline in governmental jobs.

Click on the link at right to view a chart showing the breakdown of May construction starts by market region.

The construction sector continues to struggle mightily each month and it is a real fight to generate any jobs growth. The unemployment rate within the construction sector is the highest among all sectors in the U.S. at 14.2%. While this is an improvement over a year ago when that rate was over 16%, the total lack of recovery within the housing markets has kept the construction jobs from booming once again. 1.1 million construction workers remain unemployed and this sector is struggling.

The positive news for the month was the continued boom in industrial construction starts in the U.S. following April's $35 billion in construction starts, May boasted an additional $34.1 billion worth of project activity. The industrial markets are having a banner year when it comes to construction projects. The construction season did begin earlier than expected this year thanks to the extremely mild winter across most of the U.S. and there are some worries that this boom will bust in the coming months as the overall economic situation continues to worsen. But for now, industrial companies are investing heavily in the U.S.

The Mid-Atlantic region of the country saw the most significant investment in May with sixty-eight capital or maintenance projects worth an estimated $16.5 billion began construction activities. The Southwest region saw the second highest investment totals with the largest number of projects. One hundred and two capital or maintenance projects worth an estimated $7.6 billion began construction activities in the Southwest region during the month of May. Five other regions saw between $1.3 billion and $1.9 billion worth of investment for the month, the Great Lakes, the Midwest, the Rocky Mountains, the Southeast, and the West Coast.

The Power industry was the chief mover when it came to construction starts for the month. $17.3 billion worth of capital or maintenance projects began construction activities within the Power industry in May, far surpassing any other industry. The Oil & Gas Production industry saw the second largest concentration of project activity with $5.6 billion worth of projects beginning construction while the Industrial Manufacturing industry added $3.8 billion worth of projects to the total. The Chemicals industry, the Metals & Minerals industry and the Pharmaceuticals & Biotech industry each contributed $1.2 billion or more to the construction efforts that began during the month.

This downward turn in the employment situation, especially coupled with the general economic slowdown, could not have come at a worse time for President Obama as it is an election year and it does not help that Congress has virtually ignored the fiscal problems facing the country in order to campaign for the upcoming election. The country is facing some tough times in the coming months with Europe struggling with its own financial problems, China slowing down its growth and the economic problems in the U.S. being ignored as politicians bad mouth each other in order to win an election. The jobs situation is not likely to improve in the next few months but the industrial construction starts should remain high through the balance of the summer at least, which is some good news amid the bad economic news that seems to be popping up everywhere.

Industrial Info Resources (IIR), with world headquarters in Sugar Land, Texas, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR'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