U.S. Gulf Coast lost construction jobs as oil and gas investment slowed
U.S. construction investment in oil, gas fields and pipelines contracted 4% in January-November 2021 from a year earlier, according to data shared by the U.S. Associated General Contractors of America (AGC) in January.
Louisiana led declines in construction employment in the U.S. while Texas also showed job weakness, according to data shared by the AGC in a report that also discussed construction and labor trends for 2022.
As many as 18 states and the District of Columbia posted during Feb. 2020-Nov. 2021 an increase in construction employment but 32 others didn´t post any growth or had declines, according to a Jan. 12 report by the AGC.
Louisiana, a chemical and refining hub, endured in 2021 the steepest on-year construction employment decline with a 15% contraction. Texas saw a 5.5% contraction.
Investment in construction of chemical manufacturing facilities during 2021 increased as much as 7%. This was more than the 5% on-year growth in construction investment in manufacturing plants during Jan-Nov 2021, according to data shared by the AGC.
In contrast, investment in single-unit home construction projects soared 34% during 2021.
Challenges ahead
“Contractors are, overall, very optimistic about the outlook for the construction industry in 2022,” said Stephen Sandherr, the AGC´s CEO, on Jan 12.
“While contractors face challenges this year, most of those will be centered on the need to keep pace with growing demand for construction projects,” he said.
About 74% of contractors that responded the survey said they expect their headcount will increase in 2022. Only 9% said they believed it may decline.
About 75% said they believed that in 2022 it will become “harder to hire” construction workers. Only 7% said they thought it may become easier.
Vaccines
Part of the anticipated labor challenge is vaccine-related. While the association promotes vaccination, a federal imposition may tighten worker availability in 2022, the AGC warned.
The “(U.S. President Joe) Biden administration’s vaccine mandates will prompt many vaccine hesitant workers to leave the relatively few employers covered by the orders and move to smaller firms that are not covered by the rule,” it said.
The association encourages construction workers to get vaccinated through programs like supplying information about vaccination, including in Spanish.
Infrastructure legislation
Biden signed on Nov. 15, 2021 legislation that will result in an investment of $1-trillion in infrastructure to upgrade aging bridges, public transportation, roads, and water plants across the country.
But the massive infrastructure spending approved may not result in a sudden surge in construction workers demand, according to an analysis shared by the AGC´s chief economist Ken Simonson by email.
“Infrastructure funds will take time to distribute and award to individual projects, muting the medium-term impact on labor,” the report said.
Of all sectors, those with the best prospects ahead for construction jobs are manufacturing, distribution, data centers, and renewable energy, it said.
Post-pandemic demand profile
As of Nov. 2021 there were about 345,000 construction job openings, a 32% on-year increase from a year earlier, according to the data shared by the AGC. That compared with about 300,000 in 2018 and under 250,000 in 2019.
Investment in lodging and office building development have seen contractions of 33% and 7%, respectively during the first 11 months of 2021 from a year earlier.
Air related transportation project spending saw an on-year contraction of 10%. Another change in the demand profile with the pandemic was a 7% reduction in construction of special homes for nursing care.
Future demand
Looking ahead “slower population growth means slower demand growth for most construction,” according to the results of the AGC 2022 Outlook Survey.
The report cited data that showed that the U.S. population increased only 0.12% from July 2020 to July 2021.
The association anticipated more investment in “wind, solar, battery storage and charging facilities, and related manufacturing.” On the other hand, there may be fewer oil drilling and pipeline construction.
The AGC had discussed labor markets in the U.S. Gulf Coast in 2021. At the time it warned sustained unemployment in areas like Lousiana had in the past led to worker migration to other regions or industries.
By Renzo Pipoli