A state-by-state analysis of not seasonally adjusted (NSA) national construction unemployment rates shows 42 states had lower unemployment rates between September 2022 and the same time a year ago, according to the Associated Builders and Contractors (ABC).

Using data from the U.S. Bureau of Labor Statistics, the analysis shows nearly half of all states had estimated construction employment rates at or below 3%. The national construction unemployment rate (not seasonally adjusted) dropped from 4.5% to 3.4% between September 2021 and 2022. It's worth noting, however, that this is 0.2% higher than the pre-pandemic unemployment rate in September 2019.

From March through September of this year, seasonally adjusted construction employment has been above its February 2020 pre-pandemic peak (7,624,000), minus a slight dip in April. As of September, it was 95,000 greater than its pre-pandemic peak.

“Higher interest rates are having a negative effect on plans for new construction projects; nonetheless, construction employment continues to rise as builders work on their backlog of projects,” said Bernard Markstein, president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “Further, builders are still reporting a shortage of skilled workers. Although employers want to hold on to their workers, slowing demand for new projects along with completion of older projects eventually is likely to force some contractors to reduce their workforce. At the same time, construction employment will be helped by spending on projects implemented through the Infrastructure Investment and Jobs Act.”

The Top Five States

The five states with the lowest September 2022 estimated NSA construction unemployment rates were:

1. North Dakota, 0.6%

2. Colorado, 1.1%

3. Utah, 1.2%

4. South Dakota, 1.5%

5. Tennessee, 1.8%

All five states posted their lowest September estimated NSA construction unemployment rate on record.

The Bottom Five States

The states with the highest September 2022 estimated NSA construction unemployment rates were:

46. Rhode Island and Wyoming (tie), 4.9%

48. Ohio, 5.5%

49. New Mexico, 5.9%

50. Alaska and Oklahoma (tie), 6.8%

This was the fifth consecutive month that all states had construction unemployment rates below 10%. According to ABC, national and state unemployment rates are evaluated on a year-over-year basis because these industry-specific rates are not seasonally adjusted. However, the impact of COVID-19 and other national and international disruptions means month-to-month comparisons offer a better understanding of the economic environment on construction employment.

Construction Employment Increases in October

In a separate analysis, ABC reports that the construction industry added a net gain of 1,000 jobs in October. On a year-over-year basis, industry employment has risen by 266,000 jobs, an increase of 3.6%.

Nonresidential construction employment increased by 300 positions on net. Nonresidential building added 3,200 net new jobs, while nonresidential specialty trade and heavy and civil engineering lost 2,500 and 400 jobs, respectively.

“The country’s job market remains strong, and that means we remain in a bad place because, in this economic environment, good news is bad news and vice versa,” said ABC Chief Economist Anirban Basu in a written statement. “We can expect to hear many such ironic statements during the months ahead. A few days ago, we learned that America had 10.7 million available, unfilled jobs in September. More than 400,000 of these are construction industry job openings. Today we learned that employers continue to hire, with the overall economy adding 261,000 jobs in October."

Basu said as the economy slows further and "recessionary conditions" take hold, inflation will diminish as the demand for goods and services decreases. Although this will create tough times, Basu believes contractors will endure thanks to healthy backlogs.

“For inflation to return to its 2% target, the demand for labor needs to weaken,” said Basu. “We’re not there yet, which means that the current cycle of raising interest rates will continue."