US construction hiring jumps as housing rebounds

Friday - 2/1/2013, 4:16pm EST

By CHRISTOPHER S. RUGABER
AP Economics Writer

WASHINGTON (AP) - During last year's housing recovery a question loomed: Where are all the construction jobs?

The answer arrived Friday in a government report that showed the best hiring for the U.S. building industry since the peak of the housing boom.

Construction firms added 28,000 jobs last month, according to the January employment report. And the industry has created 98,000 jobs since September, according to annual revisions that were released with the report. The last time construction contributed that many jobs to the economy was in the spring of 2006 _ right before the market went bust.

"The construction job recovery has clearly arrived," said Jed Kolko, chief economist at Trulia, a real estate data analysis firm.

Economists had known for months that the industry was turning around. Homebuilders broke ground on 780,000 homes in 2012, a 28 percent increase from the previous year. Spending on residential construction projects has risen in every month since April.

But until Friday, there were few signs of steady growth in construction employment.

The Labor Department shed some light on that with its revisions, which showed 25,000 more construction jobs added in the final three months of 2012 than initially estimated.

The gains have made the sector one of the leading job creators for the economy. Only a couple have added more: Retailers added 166,000 jobs in the past four months and education and health care added 123,000.

Hotels, restaurants and entertainment companies have gained roughly the same number as construction.

Most other sectors have lagged. Manufacturing has added only 25,000 jobs in that stretch. Financial services gained only 31,000. Transportation and warehousing added 62,000

Economists expect construction firms will keep adding jobs in 2013 as the housing recovery strengthens.

Kolko notes that a single-family home can take up to six months to build, while an apartment building can take more than a year. Many of those projects will require more workers as construction progresses.

And demand for new homes and apartments will keep rising, especially if supplies remain low. More Americans are moving out on their own after doubling up with friends or relatives during the recession.

Pat Newport, a housing economist at IHS Global Insight, forecasts that builders will start work on 970,000 homes in 2013, a 24 percent increase from last year. He expects hiring will grow, as well.

Housing has been a leading driver of past recoveries. But the bursting of the housing bubble pushed a flood of foreclosed homes on the market at low prices. That made it hard for builders to compete. And a collapse in home prices left millions of homeowners owing more on their mortgages than their houses were worth. That made it difficult to sell.

Now, six years after the bubble burst, those barriers are fading. Joseph LaVorgna, an economist at Deutsche Bank, estimates that greater construction could add a half-point to economic growth this year.

And higher home prices can make consumers feel wealthier and spend more. That could boost growth by another half-point this year, LaVorgna says.


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