Contractor hiring will remain strong throughout 2005

Contractors added an estimated 125,000 workers in the last half of 2004, almost all for building and remodeling work. California contractors accounted for 30% of the hiring. Construction employment rose in 42 states. There was essentially no change in Florida, New England, the Great Lakes States, and the Washington, D.C., metro area. This large employment gain was inconsistent with the slim growth reported for construction spending. Later revisions will raise construction spending for new buildings and remodeling more than they reduce construction employment. Another 125,000 construction workers are expected to be hired in 2005. Homebuilders will be cutting jobs; all other contractors will be hiring. Nonresidential building contractors will increase their pace of hiring progressively over the year. The construction labor market will tighten slightly because manufacturers and motor freight carriers will also be hiring. However, most regions will not experience significant labor shortages or pressure on wages. That should come in 2006.