Several positive indicators for construction have popped up in the past few weeks. The most prominent of these shoots is the employment report for March, which showed construction added 15,000 jobs, seasonally adjusted-the first increase in two years. Surprisingly, the gain was entirely in nonresidential construction (+25,000), while residential construction, which has been performing better in recent months, slipped (-10,000).
There are two reasons to be wary about this seeming good news. First, preliminary reports are always subject to revision, and a gain of 15,000 jobs (less than 0.3 percent of total construction employment) could easily be revised away by more complete data. Second, February 2010 was an exceptionally snowy month in much of the East, and enough project starts might have been deferred from February to March to account for all of the employment gain.
Nevertheless, other favorable indicators have appeared. Reed Construction Data's compilation of the value of nonresidential projects started in March showed a gain from a year earlier, as strong growth in civil categories outweighed a drop in building construction. A few states have reported tax revenues outrunning forecasts, after years of shortfalls. Indiana and Kansas were in this happy situation in February, as was Maine a few months before. And a variety of agencies and companies have reported federal stimulus funds are flowing at last.
It will take several more months of data and reports to confirm that the worst is over for nonresidential construction. Meanwhile, most firms will have to keep hunting for work.