PPP Funds Help Construction Industry Employment Rebound in May
Construction growth rebounded thanks to federal funding and the reopening of the economy. But will it last?
The United States construction industry in May began to recover from the hollowing impact of the coronavirus, adding back 446,000 jobs over the course of the month. Even with this marked rebound that produced 237,000 net new jobs, construction employment remains 596,000 jobs below its most recent peak in February.
“For contractors, this is purely good news,” Anirban Basu, chief economist for Associated Builders and Contractors, said in a press release. “With the economy beginning its recovery sooner and more dramatically than anticipated, fewer projects are likely to be postponed or canceled.”
Officials with the Associated General Contractors of America noted the resurgence in job growth was likely caused in part by some states opening up, and companies gaining access to temporary federal support programs. But they warned that those funds may not be enough to start a sustainable upward trend in employment.
“The huge pickup in construction employment in May is good news and probably reflects the industry’s widespread receipt of Paycheck Protection Program loans and the loosening of restrictions on business activity in some states,” said Ken Simonson, the association’s chief economist. “Nevertheless, the industry remains far short of full employment, and more layoffs may be imminent.”
According to a recent AGC survey, 77 percent of survey respondents represented companies that received and were using PPP funds.
While there are some positive signs in the wake of the pandemic, the future remains uncertain. The construction industry still reached an unemployment rate of 12.7 percent in May, nearly four times higher than the same time last year.
“Make no mistake — these remain treacherous times,” said Basu. “Though economic recovery may have begun, there is still the possibility of a resurgence in infections as stores, restaurants and other businesses reopen. Moreover, while [overall] unemployment dipped to 13.3 percent in May, it remains elevated.”