Construction job losses could top 1 million
Sun Aug 26, 2007 12:34PM EDT
NEW YORK (Reuters) - Job losses in the construction sector could top 1 million if a housing downturn tips the economy into recession and tighter access to credit dampens business investment.
Strength in nonresidential construction may continue to offset a downturn in housing for now, but recent turmoil in credit markets suggests job losses may accelerate in the sector in the next few months.
"With what's happening with the mortgage market, the financial markets in general, I think we'll continue to shed workers at least for six months, maybe as much as a year," said Bernard Markstein, director of forecasting at the National Association of Home Builders.
"The ability of nonresidential to continue absorbing additional workers is going to be limited, and that's going to put downward pressure on construction employment overall," he said, adding that cuts may be deeper than in the 1990s.
Construction employment fell about 15 percent in both the 1990s and 1980s recessions, and it dropped about 18 percent in the recession of the mid-1970s, according to the Bureau of Labor Statistics (BLS).
In each case, the sector's declines were far steeper than overall job losses, and recovery took longer. But in the 2001 recession, declines were relatively modest as consumer-led demand offset weak business spending.
LARGER LOSSES
About 7.7 million Americans are employed by construction companies, according to the BLS, down about 75,000 from a peak in September 2006. The sector's unemployment rate of 5.9 percent compares with 4.6 percent for the overall labor force.
A 15 percent decline now would mean more than 1 million jobs lost.
