Signs Point To Sharper Drop In State’s Construction Jobs

Following almost four years of steady growth, the number of construction jobs in Connecticut has started to decline slightly, and several leading indicators suggest that the slide might steepen later this year.

The state had 67,800 construction jobs in April, according to preliminary numbers from the U.S. Bureau of Labor Statistics. That was down by 0.4 percent from a year earlier and down 1.6 percent from January.

Nationally, total construction jobs fell from 7.52 million in the fourth quarter of 2007 to 7.28 million in May, a 3.5 percent decline. And the 34,000 jobs lost in construction between April and May was the largest for any employment sector. That could spell trouble for Connecticut.

So far, Connecticut has avoided a sharp drop in construction employment. But it also avoided steep declines in housing sales and prices - at least until the credit crunch finally hit the state in late 2007.

A similar time lag may apply to construction jobs in the state, said Charles Joo, an associate research analyst with the state Department of Labor.

“We held off for a while,” he said, referring to how construction employment remained steady last year. “But it looks like Connecticut’s construction employment is starting to feel what the country has been feeling for a while.”

Joo noted that housing permits began declining at towards the end of last year. He said it takes about four months for construction employment figures to reflect such a downturn.

More Choices

The downturn has increased the pool of available construction workers. Michael Fournier, controller at the Enfield-based Spazzarini Construction Co., said his company has been doing well and adding jobs for the summer building season. He has, however, noticed that other contractors have not been as fortunate.

“We’re actually finding that we have a lot more choices [when hiring] new employees, and good choices because there are more people out there looking for work,” he said. “It’s something that has just started this spring.”

Architectural Billings

With housing permits expected to continue their slide until the latter half of the year, it is expected that construction jobs will follow a similar pattern.

Another disturbing indicator is the monthly Architectural Billings Index, or ABI, complied by the American Institute of Architects in Washington, D.C.

When the index stands at 50, billings are flat. The national index has fallen from 55.0 in December to 43.4 in May. Even more ominous, the index pertaining to the Northeast fell from 63.0 in January to 38.7 in March and stood at 41.7 in May.

According to AIA Chief Economist Kermit Baker, the index has been a leading economic indicator for construction spending since its inception in 1995. “We have found that design activity is a predictable indicator of construction activity in the next six months because that is how long the design process takes,” he said. “It doesn’t look like construction is poised for a turnaround until 2009.”

Another negative indicator comes from the Virginia-based Associated Builders and Contractors, which predicts that construction prices will soar this summer due to surges in energy and commodities prices.

While the construction inputs nationwide increased by 2.6 percent in May, ABC officials said the increase will actually hurt commercial construction starts because of a soft economy and concerned lenders.

“Certainly, residential construction is way down considering where it was a couple of years ago, and the high foreclosure rates are not helping,” said Sal DiPillo, labor statistics supervisor at the state Department of Labor. “With housing prices down and weakness in the market, there seem to be no real incentives to be building.”

For their part, local construction builders and organizations remain confident that they will not see significant job cuts this summer.

Lisa Kidder, public relations director for the Home Builders Association of Connecticut, said that organization declined to comment about lost jobs because it felt it was not an issue and that the losses may be felt more in commercial construction than residential construction.

Don Shubert, president of the Connecticut Construction Industries Association, said commercial construction has avoided major problems. “In general, we’ve noticed that things have been a little slower this year,” Shubert said. “Connecticut has been fortunate.”