On March 24, Associated Builders and Contractors (ABC) launched its state-by-state economic analysis with the release of economist Bernard Markstein’s analysis of construction's contribution to each state's gross domestic product. Below is Markstein’s analysis of the construction job market and unemployment rate in each state. This analysis will be produced monthly in addition to ABC’s existing national economic data and analysis.
The construction industry has shown evidence of recovery and appears to be on a mild upward trajectory despite occasional backsliding. In 2014, construction spending for all the major areas rose faster than the rise in construction costs. Last year also marked the fourth year in a row that construction employment grew and the largest annual advance in construction employment since 2005.
This rebound in construction employment has been reflected in the construction unemployment rate. For the United States, that rate—which is reported on a not seasonally adjusted (NSA) basis—has been falling on a year-over-year basis for almost four and a half years. Much of that early decline was due to the exit of workers from the industry as they accepted work in other industries, sought training in a new field, or left the workforce. More recently, the decline in the construction unemployment rate has reflected rising employment in the industry.
The return of construction has been fairly widespread across the nation. On a year-over-year basis, the estimate of the January construction unemployment rate was down in 46 of the 50 states.
As would be expected, the January NSA construction unemployment rate for each state increased from December for all states. Only 11 of the 50 states had a rate below 10 percent in January, down from 21 states in December.
The one big surprise on a year-over-year basis was Louisiana where the rate jumped from 7.6 percent in January 2014 to 10.8 percent in January 2015. Note that even with this dramatic surge in the construction unemployment rate, Louisiana had the 16th lowest rate among the states. That is still quite a comedown from having the second lowest rate in the nation in January 2014. The jump in the rate may reflect the effects of lower oil prices on construction-related activity in the energy sector. There has also been a slowdown in the overall Louisiana economy as evidenced by a rise in Louisiana’s general unemployment rate.
The Top Five States
Four of the top five states based on lowest January construction unemployment rates (or in the case of Maryland, Nebraska, and Hawaii, the construction and mining unemployment rate) remained the same as December, though the order was somewhat different. Maryland, which remained number one, often has a low construction and mining unemployment rate as a result of being a small state with relatively few workers engaged in the construction and mining industries and in an area (bordering Delaware, Pennsylvania, Virginia, and Washington D.C.) where it is easy to move to find work in construction or in other industries.
Hawaii, another state where construction and mining employment are reported together, jumped to number two from number five. Utah, which was number two in December based on revised employment data, slipped to number three. Despite the drop in oil prices, Texas moved up from seventh to fourth in the rankings.That pushed Nebraska, again with a construction and mining unemployment rate, down from number four to number five.
Apparently due to the drop in oil prices and the resulting slowdown in the oil fields, North Dakota fell out of the top five, dropping from third in December to sixth in January.
The Bottom Five States
Four of the five states with the highest construction unemployment rates for January remained the same as in December, although not in the same order. Rhode Island had the highest rate in both January and December (revised up from the earlier estimate).
Illinois had the second highest rate in January, up from the third highest rate in December. Connecticut also moved up one slot in this less-than-desirable list, from fourth highest to third highest. Indiana, which ranked at the 41st lowest rate in December, fell to 47th in January, which is the fourth highest rate.
Michigan had the fifth highest rate in January after suffering from the second highest construction unemployment rate in December. Michigan’s December construction unemployment rate was originally reported as the highest in the country; however, revised data moved the rate down from 15 percent to 14.5 percent.
Finally, Georgia’s construction unemployment rate for December was revised down from 14 percent to 13.4 percent, dropping it from fifth highest to seventh highest for that month. For January, Georgia recorded a rate of 14.8 percent, ranking it 38th lowest or 13th highest.
Read more on ABC’s Web site.