Allow me to start this post with a reference
from my blog post 8-6-16 Construction Jobs – Is July a Turning Point?
- For the 6 month period including Oct’15 thru Mar’16 construction gained 214,000 jobs, the fastest rate of growth in 10 years. Then, after 3 months of losses, July shows a modest gain.
- During that same period Q4’15 spending was flat but by the end of Q1’16 spending had increased more than 4% in 6 months, or at an annual rate of 8% to 9%.
- Even though some upward revision is expected for June spending, total Q2’16 spending will still be down 2% to 3% from Q1.
- Q2’16 jobs declined all 3 months, keeping in mind this immediately follows the fastest rate of growth in 10 years. But it also tracks directly to three monthly declines in spending.
Comment Update 10-7-16
June spending did get revised up by 1.85% and 2nd qtr spending came in 2.05% less than 1st qtr. However total 1st half spending finished 7.2% above the 1st half 2015. August spending looks low at 1st print but we can expect that to be revised up by 1% to 2%. Historically, the 1st release of construction spending gets revised up 90% of the time. So it looks like spending bounced off of the April-May low point.
The 2nd quarter jobs slowdown coincided with the 2nd quarter spending dip.
From my blog post 8-6-16 Construction Jobs – Is July a Turning Point?
It is not so unusual to see jobs growth slowed in these last few months. It follows directly with the Q2 trend in spending and it follows what might be considered a saturation period in jobs growth. The last two years growth was the best two-year period in 10 years. It might also be indicating that after a robust 6 month hiring period there are far fewer skilled workers still available for hire. The unemployed available for hire is the lowest in 16 years.
We got modest growth in July that I hope to see continue for the 2nd half 2016. I expect spending to experience strong growth in the 2nd half and jobs growth should follow closely, perhaps adding 125,000 to 150,000 more jobs. However, although I do expect both spending and jobs growth, jobs could be somewhat restrained by lack of available skilled workers.
Construction Jobs growth from October 2015 through March 2016 was exceptional, 214,000 construction jobs added in 6 months, topping off the fastest 2 years of jobs growth in 10 years. Growth like that can only be followed by a slowdown in hiring until companies reach a jobs/workload balance, and it appears we may have experienced that slowdown. Jobs have been down four of the last six months. I expected to see a turn-around in the 2nd half, and so far, for the 3 month period July-Sept we’ve added 34,000 jobs. That’s starting out perhaps a little slower than I thought. For much of 2014 and 2015 volume growth was exceeding jobs growth, but for 10 months from August 2015 through May 2015, volume growth stalled and jobs growth exceeded volume growth by 3%. Only in the last few months has volume growth begun to outpace jobs growth again. I predicted at least 125,000 new jobs in the 2nd half, so we would need to add 90,000 to 100,000 more before year-end. But, there could be skilled labor constraints and the Aug and Sept numbers are still subject to revision. And we still have 3 months to go.