Highs & Lows
Construction Employment Increases While Spending Decreases
by the Associated General Contractors of America
Construction sector employment increased by 4,000 positions in January as gains in nonresidential construction offset the decline in the residential sector, according to an analysis of new government data the Associated General Contractors of America released today. Association officials cautioned, however, that tightening labor market conditions might undermine future construction industry hiring.
“The already tight labor market is getting tighter in the construction sector,” said Jeffrey Shoaf, the association’s Chief Executive Officer. “Absent new investments in construction training and work authorization programs, it will be hard for firms to keep pace with demand.”
In January, nonresidential construction firms added 4,400 workers, with gains of 1,100 in building construction and 5,600 in specialty trades, while heavy and civil engineering firms shed 2,300 jobs. Residential construction employment dipped by 200, as residential building added 1,900 positions, offset by a 2,100-job decline in specialty trades.
Construction employment in January totaled 8,291,000, seasonally adjusted, an increase of 4,000 from December. Headcount has increased by 178,000 jobs or 2.2% during the past 12 months. Over the past 12 months, employment at nonresidential construction firms grew by 2.9%, a slight slowdown from the 3.1% increase in the previous year. Residential construction employment rose by 1.2% from January 2024 to January 2025, down from 1.4% in the prior 12 months.
A separate government report showed there were 217,000 job openings in construction at the end of December. Construction job openings, measured as a snapshot of available positions on the last day of each month, have declined for five consecutive months, dropping 50% year-over-year in December 2024. The sharp decline in openings suggests a turning point, potentially driven by hiring difficulties, a cooling labor market, or growing uncertainty about impending policy changes.
Average hourly earnings for production and nonsupervisory employees in construction, covering most onsite craft workers as well as many office workers, climbed by 3.8% over the year to $36.54 per hour. Overall private sector pay for production workers rose 4.2%, to $30.84. That difference in hourly pay constituted a wage premium of just over 18% compared to the overall private sector.
Association officials noted that nearly 80% of firms reported they are having a hard time finding enough workers to hire, according to the recently released AGC of America/Sage 2025 Construction Hiring and Business Outlook. They added that a growing number of firms are reporting workers are not showing up to job sites amid fears of increased immigration enforcement activities.
“The only way firms will be able to keep pace with strong demand for construction is if there are enough people available to build,” Shoaf said. “That is why federal officials need to boost funding for construction education programs and expand lawful work authorization programs for people with construction skills.”
Construction employment increased in 244, or 68%, of 358 metro areas between December 2023 and December 2024, according to an analysis by the association of new government employment data. Association officials cautioned, however, that most firms reported having a hard time finding enough qualified workers to hire even before the new Trump administration began to curtail work authorizations, among other measures.
“Construction firms are doing all they can to recruit and retain as many workers as possible to keep pace with demand,” said Shoaf. “But it is hard when the government discourages students from pursuing those careers and won’t let many people enter the country to lawfully work in construction.”
Houston-The Woodlands-Sugar Land, Texas, added the most construction jobs, 15,200 jobs, 6%, between December 2023 and December 2024, followed by Northern Virginia, 6,900 jobs, 8%; Orlando-Kissimmee-Sanford, Florida, 6,100 jobs, 7%; Las Vegas-Henderson-Paradise, Nevada, 6,000 jobs, 7%; and Miami-Miami Beach-Kendall, Florida, 5,200 jobs, 9%.
Anchorage, Alaska, had the largest percentage gain, 18%, 1,900 jobs, followed by Fairbanks, Alaska, 15%, 400 jobs; Kahului-Wailuku-Lahaina, Hawaii, 13%, 600 jobs; and Cheyenne, Wyoming, 11%, 400 jobs.
Construction employment declined over the year in 63 metro areas and was unchanged in 51 areas. The largest job loss occurred in New York City, New York, -9,700 jobs, -7%, followed by Phoenix-Mesa-Scottsdale, Arizona, -5,100 jobs, -3%; Portland-Vancouver-Hillsboro, Oregon and Washington, -4,400 jobs, -5%; Anaheim-Santa Ana-Irvine, California, -4,100 jobs, -4%; and Riverside-San Bernardino-Ontario, California, -3,700 jobs, -3%.
The largest percentage decrease occurred in Ithaca, New York, -9%, -100 jobs, followed by Silver Spring-Frederick-Rockville, Maryland, -7%, -2,300 jobs; Duluth, Minnesota and Wisconsin, -7%, -600 jobs; New York City, New York, -7%, -9,700 jobs; and 5% declines in San Francisco-Redwood City-South San Francisco, California, -2,000 jobs; San Jose-Sunnyvale-Santa Clara, California, -2,600 jobs; Pueblo, Colorado, -200 jobs; Portland-South Portland, Maine, -500 jobs; and Portland-Vancouver-Hillsboro, Oregon and Washington, -4,400 jobs.
Association officials noted the federal government invests four times as much annually urging students to attend college than it does preparing them for careers in fields like construction. There are limited opportunities for people with construction skills to lawfully enter the country and work in construction. Association officials urged policy makers to boost funding for construction education and training and allow more people to lawfully enter the country to work in construction.
Construction spending decreased 0.2% from December to January with mixed results across residential, nonresidential, and public segments, according to an analysis of a new government report that the Associated General Contractors of America released today. Association officials cautioned that spending on new construction projects could be negatively impacted by proposed new tariffs on a range of goods from Canada, Mexico, and China that are likely to make projects more costly.
“Construction spending growth has been slowing under pressure from high interest costs and now the prospect of new waves of tariffs,” said, Ken Simonson, Chief Economist of the Associated General Contractors of America. “There have already been notable cancellations and postponements for major manufacturing plants and the impacts of new tariffs are likely to lead to more delays and cancellations.”
Spending totaled $2.19 trillion at a seasonally adjusted annual rate in January. The total was 0.2% below from the December rate and 3.3% above the January 2024 level. Simonson noted that construction spending increased at a 6.6% rate in 2024 as a whole, twice as fast as the latest year-over-year increase.
Manufacturing construction spending declined 0.3% in January and the year-over-year growth slowed to 5.6% from 20% in 2024. Simonson noted that last week alone, Air Products pulled out of three planned projects and Intel pushed out completion of its $28 billion Ohio project from 2026 to 2031.
Other major categories that slipped in January include educational construction, which fell 0.6% from December; multifamily construction, which decreased 0.7%; and private office construction, which declined 0.5%. These and other contractions outweighed increases in single-family homebuilding, which rose 0.6%; data center construction, which climbed 1.9%; and gains in several infrastructure sectors. In particular, highway and street construction spending rose 0.6% for the month, sewage and waste treatment outlays increased 0.4%; and spending on transportation facilities edged up 0.1%.
The price of materials and services used in nonresidential construction increased 0.8% from December to January, the largest jump in costs in the past 12 months, according to an analysis by the Associated General Contractors of America of government data released today. Association officials warned that steel and aluminum tariffs will further boost the cost of key construction materials and are likely to make construction projects more costly and invite retaliation by United States trading partners.
“Input costs are likely to jump even more if the Trump administration goes ahead with the tariffs it has threatened to impose,” said Simonson, noting that the January data was collected prior to the inauguration of President Trump. “Contractors that have started fixed-price projects will be squeezed by higher materials costs, while rising costs and delayed availability will make future projects more expensive.”
The producer price index for new nonresidential construction, a measure of what contractors report they would charge to put up a specific set of buildings, climbed 0.3% in January and 1.7% over the past 12 months. The cost of cement rose by 3.2% in January year-over-year, while ready-mixed concrete increased by 4.1% compared to a year ago. Asphalt paving mixtures saw a significant 8.6% rise. On the metals side, aluminum mill shapes climbed 9.7% for the year, and copper and brass mill shapes surged 12.3% during the past 12 months, both critical components in electrical and plumbing applications.
Association officials cautioned that materials costs, particularly for steel and aluminum products, are likely to continue increasing now that the Trump administration has imposed a 25% tariff on those products. They noted those increases will make the cost of many construction projects more expensive, potentially prompting some activity to be delayed or cancelled.
“The math is pretty simple, the more contractors have to pay for the materials they need, the more it will cost to build new infrastructure, housing and economic development projects,” said Shoaf. “As much as we want to see new domestic manufacturing capacity, stifling economic activity is clearly not the best way to help.”
