Dodge Construction Network reports January saw a slowdown in hiring in the industry as well as a fall in construction starts. However, it also reported “widespread growth” in nonresidential projects in the planning pipeline.
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Dodge Construction Network’s series of reports for January indicate the construction industry appears to be taking a breather at the start of the new year but with momentum gaining for the second half.
Dodge reports January saw a slowdown in hiring in the industry as well as a fall in construction starts. However, it also reported “widespread growth” in nonresidential projects in the planning pipeline.
“Nonresidential planning activity saw diversified growth in January, with every vertical experiencing positive momentum,” said Sarah Martin, Dodge associate director of forecasting. “Uncertainty over fiscal policies, ongoing labor shortages and elevated construction costs will continue to be headwinds to the construction sector. However, further monetary easing and the sizable number of projects in planning should support construction spending in the back half of the year.”
Dodge now expects the Fed to cut interest rates twice in 2025, with those occurring in the second half of the year.
Slower Hiring, Wage Growth
The construction unemployment rate has steadily climbed since September and hit 6.5% in January “due to significantly lower hiring over the past four months,” Dodge reports.
That compares to the national unemployment rate of 4%.
Wage growth has also begun to slow, dropping from 4.5% growth in December when compared to December 2023 to 4.1% in January. That’s the same percentage as overall national wage growth.
Here’s a construction-industry breakdown from Dodge:
Construction employment rose 4,000 in January, easing from 13,000 new jobs in December and an average monthly gain of 12,000 in 2024.
Sectors seeing employment gains in January were residential and nonresidential building construction and nonresidential specialty trade contractors.
Sectors seeing employment declines in January were residential specialty trade contractors and heavy and civil engineering construction.
Dodge Construction NetworkConstruction Starts Decline
Total construction starts dropped 6% in January when compared to January 2024.
Dodge reports the following industry breakdown during that period:
Nonresidential down 22%.
Residential down 2%.
Nonbuilding up 17%. Nonbuilding includes utility/gas starts (up 84%), highway and bridge starts (up 10%) and environmental public works (flat).
Dodge reports that the Northeast and South Central regions saw a rise in starts in January. Regions seeing a drop in starts: the Midwest, South Atlantic and the West.
“Policies implemented by the new administration such as mass deportations, reductions in federal government employment and spending, and tariffs, combined with the policy response of the Federal Reserve will chart the course of construction starts and employment over the next two years,” Dodge says.
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Dodge Construction Network
Dodge Construction Network
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