(The Center Square) – A steep employment decline in North Carolina’s construction sector has defied a rising trend nationwide, but recent analysis suggests there’s positive signs on the horizon.
“Construction is … a ‘canary in the coal mine’ for our economy: every recession in the past 40 years (except the COVID-19 recession) has been preceded by a decline or flattening in the growth of construction employment,” according to a January Economy Watch report from the state Department of Commerce.
That reality has raised concerns about a sharp employment decline in the construction sector in 2023 that began to rebound in October and November but remains about 1% below September 2022 levels. Nationally, construction employment had a steady increase to about 3% higher through November.
“While preliminary employment numbers, taken at face value, would suggest the bottom has fallen out of North Carolina’s construction sector, nationwide growth in construction spending and evidence that North Carolina remains an attractive environment for new residents and new businesses tell a far more optimistic story,” says the analysis.
American homebuilding that declined with rising interest rates through the latter half of 2022 began an assent in May. Spending on nonresidential construction for manufacturing facilities and public works, driven in large part by federal spending, has increased 27% since May 2022.
Despite higher interest rates, the federal spending on infrastructure, microchips, and electrification “has given our construction sector plenty of work to keep busy,” contributing to projections of rising construction employment over the coming decade.
The Commerce Department’s 2021-30 employment projections suggest construction jobs could hit 259,482 in 2030 with an annual growth rate of 0.9%. That’s about 21,000 jobs more than in 2021.
The Associated General Contractors of America’s 2024 Construction Industry Hiring and Business Outlook Survey shows North Carolina contractors predict the value of projects will be the same or higher than last year, with the exception of multifamily residential, retail and private office construction.
More than three-quarters of the 27 contractors surveyed expect to add employees, including 62% who have struggled to fill both salaried and hourly positions despite many increasing pay, incentives, and benefits.
About half of contractors who participated in the survey postponed or canceled projects in 2023, with the top reasons including rising costs, rising interest rates, and reduced funding available.
Contractors polled expect those same issues to persist in 2024.
Among the “biggest concerns” this year, 67% pointed to worker quality, 59% cited rising direct labor costs, and 56% are worried about an insufficient supply of workers or subcontractors. Roughly half or more also cited an economic recession, rising interest rates, material costs, and increased competition for projects as well.
Stephen Sandherr, CEO of the Associated General Contractors of America, said in a statement about the broader national outlook that 2024 offers a mixed bag for construction workers.
“On one hand,” he said, “demand for many types of projects should continue to expand and firms will continue to invest in the tools they need to be more efficient. Meanwhile, they face significant challenges when it comes to finding workers, coping with rising costs and weathering the impact of higher interest rates.”
