November 30, 2006 (The Editor’s Desk is updated each business day.)

Employment trends in residential and nonresidential construction

Following the recession of 2001, construction industries serving residential customers have thrived, and those serving nonresidential customers stagnated or declined.

[Chart data—TXT]

Demographic trends and favorable economic developments created strong demand for residential construction. Low mortgage rates, surging sales of second homes, baby boomers with large amounts of home equity, affluent and educated young people moving within the United States, and immigration into the United States fueled activity in the housing market.

This increased housing activity carried through to residential building employment, which grew through virtually all of the 2001 recession, adding 194,000 jobs following its last employment trough in April 2001.

The picture for nonresidential construction has not been nearly as rosy.

Driven by generally bleak business conditions, especially following the collapse of the "dot com" economy of the 1990s, employment in office-using industries experienced a decline. This same trend is seen in industrial construction, which has been negatively affected by long-term weakness in manufacturing. This has led to greatly diminished nonresidential construction investment.

Employment in nonresidential building construction entered a period of nearly 3 years of decline in October 2000. By the time it reached its trough in February 2004, the industry had lost almost 95,000 jobs. Since then, the industry has recovered about a third of the lost jobs.

These data are from the Current Employment Statistics program. To learn more, see "Recent employment trends in residential and nonresidential construction" by John P. Mullins, Monthly Labor Review, October 2006.