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Job Reports Create Optimism

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The U.S economy added 200,000 nonfarm jobs in December, and the construction industry added 46,000 over the course of 2011. PhotoAlto via AP Images 

In December the U.S. unemployment rate continued its downward trend, but the construction industry added jobs in its best showing in several years. Modest gains may soon be seen in architecture as well. 

January 17, 2012—A new unemployment report by the U.S. Bureau of Labor Statistics shows that the unemployment rate was 8.5 percent in December, continuing a downward trend. The unemployment rate has declined by 0.6 percent since August, the report reveals. The report, which is based on seasonally adjusted data, finds that the U.S economy added 200,000 nonfarm jobs in December.

Transportation was one of the leading sectors involved in the job gains; employment in transportation and warehousing rose by 50,000 in December, the Labor report indicates. However, this increase was due more to increases in the couriers and messengers industry, which added 42,000 jobs, than increases in infrastructure-related work.

Nevertheless there is good news for the engineering and construction professions from the Associated Builders and Contractors (ABC), a trade association based in Arlington, Virginia. The ABC reports that the construction industry added 46,000 jobs in 2011, some 11,000 of which were in heavy and civil engineering construction. This represented the best industry performance since January 2007, according to the ABC. And although the construction industry unemployment rate jumped to 16 percent in December from 13 percent in November, Anirban Basu, the chief economist for the ABC, says that number is not seasonally adjusted, as the Bureau of Labor statistics are, and therefore reflects a natural loss of jobs due to weather conditions. He says if the numbers had been seasonally adjusted, the results would have been more positive.

“More construction jobs existed than we would have expected given that it was December,” Basu explains. “The construction industry didn’t lose as many jobs as you would expect [due to weather]. That tells you the construction economy actually improved.”

Basu says the construction unemployment numbers are part of a positive trend in which the construction industry appears to be on the mend. “That might [seem] surprising given the unemployment rate in construction in December,” Basu says, “but put that number aside and look at the broader statistics that show that construction is now adding jobs, albeit quite slowly. That’s a far cry from 2008 to 2010 when construction was losing jobs very rapidly.”

The architecture profession is not yet ready to claim similar gains, but things may be improving, according to the American Institute of Architects (AIA), headquartered in Washington, D.C. Architecture firms reported an increase in November billings in the AIA’s Architecture Billings Index (ABI), which measures construction activity in the 9- to 12-month lag time between architecture billings and construction spending. Kermit Baker, the chief economist for the AIA, cautions that while this is a positive sign, current conditions do not yet indicate a permanent rebound in design activity. “I think the construction unemployment numbers are a lagging indicator of what is going on at architecture firms because the design work comes before the construction work,” Baker says. While billings haven’t been released for December, Baker notes that billings have been “balanced” throughout 2011.

“In a sluggish economy like we are seeing now you need stronger growth to justify new construction activity, and we are just not seeing that,” says Baker. “There is a lot of concern by owners and developers [as to whether] they want to go ahead with these projects. There has been much wait and see, and a fair amount of problem in obtaining financing for these projects.”

Still, the AIA reports that inquiries for new projects did increase sharply in November. “The inquiries number was one of the strongest we have seen in a while,” says Baker. And architecture firms do expect revenue to increase by at least 2 percent in 2012 relative to 2011, Baker says. “More firms think it is going to be up than down, but on net,” says Baker. “It is hard for them to look beyond three or four months. But it is modestly optimistic in terms of what they think will happen in the design profession in 2012.”



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