Construction sector adds jobs, plans for stronger activity

Over the month, commercial planning expanded 1.9% and institutional planning improved 5.7%, the index showed. The DMI tracks the value of nonresidential construction projects entering the planning stages. It typically leads construction spending by about 12 months.

“Owners and developers continued to prime the planning queue in August, ahead of next year’s anticipated stronger market conditions,” said Sarah Martin, associate director of forecasting at Dodge Construction Network.

“With the Fed’s September rate cut all but finalized, the influence of selective lending standards and inflation should moderate next year, alongside a modest upgrade to consumer demand. As a result, stronger planning activity was widespread in August, with most nonresidential sectors seeing growth.”

Such forecasts are good signs for the steel and aluminum used in these building projects — and that’s good for scrap demand.

The Federal Reserve is expected to announce cuts interest rates at its next meeting Sept. 17-18. That would reduce short-term borrowing costs for businesses. With cracks forming in manufacturing demand and consumer spending, many are looking to rate cuts to bolster the economy.

Meanwhile, the latest unemployment report from the Labor Department, showed overall job gains were partly driven by hiring in construction.

The sector added 34,000 jobs in August while the industry’s unemployment rate fell to 3.2 percent, the lowest August rate in the 25-year history of the data, according to an analysis by the Associated General Contractors of America.

“Construction job growth was the strongest in five months in August,” said Ken Simonson, chief economist of the Arlington, Virginia-based trade group. “But the record-low unemployment rate for jobseekers with construction experience shows how much difficulty contractors face in finding qualified workers.”

Construction employment in August totaled 8.28 million, seasonally adjusted. The sector has added 228,000 jobs, or 2.8%, during the past 12 months, nearly double the 1.5 percent increase for total nonfarm employment. The bulk of those employment gains are in nonresidential construction, which added 28,300 employees in August.

The unemployment rate among jobseekers with construction experience was 3.2% in August, the lowest August rate in the history of the series. Simonson remarked that this is another indication of steady demand for construction.