August Construction Unemployment Rates Improve in 45 States from 2014

On Sep 30, 2015

Nationally, the construction employment picture has continued to improve from last year. The not-seasonally-adjusted (NSA) construction unemployment rates for the country and 45 states were down in August on a year-over-year basis. For the first eight months of the year, construction added 113,000 seasonally adjusted (SA) jobs. At the same time, NSA jobs increased by 221,000 from August 2014 to August 2015.

When looking at the monthly movements, it must be remembered that these are NSA unemployment rates. Hence, they tend to have a seasonal pattern. This is the reason that year-over-year comparisons of the NSA rates are preferred. Thus, when looking at the monthly rate movements, some care should be taken.

For the last 15 years, August and September have been transition months for the national NSA construction unemployment rate. Roughly half the time the rate increases from the previous month. This August, the rate rose 0.6 percent. Thus it is no surprise that 44 states saw their estimated NSA construction unemployment rate increase from July.

Despite the rise in rates, all state construction unemployment rates were under 10 percent for the third consecutive month. The NSA construction unemployment rate for four states—Arkansas, Ohio, Utah, and Wisconsin—was unchanged from the previous month. Two states—Georgia and Indiana—experienced a small decline in their rate.

This improvement in construction employment has been driven by expanding construction activity. As of July, SA total construction spending has increased for eight months in a row. July year-to-date NSA construction spending was up 9.3 percent from the same period in 2014. However, although heavy engineering (non-building) construction spending has risen for five consecutive months, it is down 3.7 percent on a year-to-date basis compared to the same period last year. Surprisingly, it is nonresidential building construction that is surging—up 19.7 percent year-to-date. That outstrips residential construction spending, which is up 10.4 percent year-to-date.

The Top Five States

The five states with the lowest construction unemployment rates in order were:

1. North Dakota
2. Wyoming
3. Hawaii*
4. Nebraska and South Dakota*

* Unemployment rate is for construction, mining, and logging combined

Four of the top five states—North Dakota, Wyoming, Hawaii, and South Dakota—were also in the top five in July. North Dakota held on to its number-one position from July based on revised data (previously reported as number two in July). Although North Dakota remains in the group of the five states with the lowest estimated construction unemployment rates, it was also one of the five states whose year-over-year construction unemployment rate increased (the other four were New Mexico, Oklahoma, South Dakota and West Virginia). Developments in the energy sector were a major factor in North Dakota’s low rate a year ago as well as its increase on a year-over-year basis. While the state’s continued construction unemployment rate remains relatively low, it is largely due to work was already underway in the oil fields as energy prices have dropped. The tendency for many of those who have lost their jobs in construction to move to other states (often their home state) in search of work has also helped keep North Dakota’s rate low.

Wyoming moved into second place from fifth place based on revised data (it was previously reported in first place for July). Like North Dakota, Wyoming’s economy is strongly affected by the energy sector. Also like North Dakota, Wyoming has a strong reliance on agriculture and government (mainly military bases). For now, these two sectors are helping to cushion the blow of lower energy prices for both states.

Hawaii kept its third-place position based on revised data for July (tied with Maryland). It had previously been reported in fifth place in July. Maryland fell to tenth place in August.

Fourth place was a tie between Nebraska and South Dakota. In July, Nebraska had the seventh lowest estimated construction unemployment rate based on revised data (previously reported as eighth lowest). South Dakota dropped from second lowest based on revised data (previously reported as third lowest). Both states’ economies depend heavily on agriculture, which has boomed in recent years. However, the recent rise in the foreign exchange value of the dollar will pose a challenge to that sector going forward.

The Bottom Five States

The five states with the highest construction unemployment rates (from lowest to highest) were:

46. Arizona
47. Mississippi

48. Rhode Island and West Virginia (tie)
50. New Mexico

Three of the five states with the highest estimated construction unemployment rates in August—Mississippi, Rhode Island, and West Virginia—were among the five highest in July. New Mexico, with the highest construction unemployment rate in August, had been near the middle of the pack in July, tied for 27th lowest rate with Indiana and Oregon. New Mexico also suffered both the largest monthly and year-over-year increase in its construction unemployment rate. Undoubtedly, the downturn in the energy sector was a major contributor to this jump in construction unemployment.

Rhode Island and West Virginia were tied with the second highest construction unemployment rate. This was a slight improvement for West Virginia, which had the highest rate the previous two months. Rhode Island maintained its second highest rate status based on revised data (previously reported as tied for fourth highest in July).

Mississippi retained its position of fourth highest rate based on revised data (previously reported as third highest in July). Arizona had the fifth highest rate compared to tenth highest in July. Although Arizona’s estimated construction unemployment rate was down 1.2 percent from a year ago, it rose 1.3 percent from July, the seventh largest monthly increase among the states.

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