How construction can lose jobs in middle of home building rebound

May 3, 2013: 1:40 PM ET
construction employment
Cuts in government spending on construction projects led to the drop in April's construction employment.
NEW YORK (CNNMoney)

The April jobs report showed a drop in construction employment, but it isn't because the housing boom is slowing.

The sector lost about 6,000 jobs overall, according to the Labor Department's jobs report. This was largely due to a decline in hiring for non-residential buildings or public works projects like roads or sewer plants. Combined, these two areas lost 19,700 jobs.

Meanwhile, home builders and their subcontractors added 13,300 workers, even more than in March.

A big part of the sector's pullback is due to a drop in government-funded construction projects, a trend that has been going on for about two years.

Federal construction spending is down 28% since peaking in August 2011, when stimulus spending was still going strong, according to Ken Simonson, chief economist of the Associated General Contractors of America, an industry trade group. Local governments, particularly school districts, have also been pulling back on construction spending after building a rush of new ones during the housing boom.

"You don't need to open a new school every month if people aren't coming," he said.

Related: April jobs report - Hiring picks up

Additionally, many builders are having a hard time finding skilled construction workers.

David Crowe, chief economist with the National Association of Home Builders, said residential construction hiring likely would have been even higher in April if not for the shortage of skilled workers in some markets. He said a survey of his trade group's members found about half couldn't find workers with the necessary skills.

Behind April's jobs report

Simonson and other experts say the cutback in federal spending -- known as the sequester -- that went into effect March 1 hasn't halted work on any construction projects already underway. But they said federal agencies knew the sequester was looming and did scale back new construction contracts earlier this year.

Record low mortgage rates, a rebound in home prices and strong new home sales prompted the fastest pace of home building in nearly five years in March, according to a separate government report.

Join the Conversation
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.24%4.29%
15 yr fixed3.33%3.28%
5/1 ARM3.65%3.78%
30 yr refi4.35%4.22%
15 yr refi3.24%3.23%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com
Search for Jobs