Atlanta builders see growth despite February national jobs hiccup

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Unfinished construction in February at the Halcyon mixed-use development in Forsyth County. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)

84% of Georgia contractors surveyed expect 2019 revenue to rise

Local builders have more work than a year ago, according to an industry survey, despite a weaker-than-expected national employment report that showed jobs in the construction sector dropping.

Some 84 percent of Georgia contractors — most of them in metro Atlanta — also expect revenues to increase this year, according to the poll of 149 construction companies conducted in December by Bennett Thrasher, a consulting and accounting firm, and Kennesaw State University's program in construction management.

"Certainly, we see no headwinds in the economy," said Scott Hazy, co-leader of the construction practice at Bennett Thrasher in Atlanta.

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Nationally, just 20,000 jobs were added across the economy in February, the U.S. Labor Department reported Friday. That was far short of the roughly 175,000 anticipated and the weakest job growth since September 2017. Among drags was a loss of 31,000 jobs in construction.

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Economists generally discounted the report as a one-month stumble, the ripple effect of bad weather and a government shutdown.

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The past three months average gains of 186,000 jobs, said economist Roger Tutterow of Kennesaw State. “I suggest people don’t panic until they see the three-month average drop below 100,000,” he added.

Friday’s national report also conflicts with what Hazy sees day-to-day of local business. “On the contrary, there are labor shortages in the construction sector,” he said.

Since the end of the recession, metro Atlanta has been one of the better places to be in construction. The region had about 136,300 construction workers at the end of December, up 8.5 percent from a year earlier, according to the Bureau of Labor Statistics.

Nationally, construction employment totaled 7.4 million in December, up 3.1 percent from a year earlier, according to Ken Simonson, chief economist for the Association of General Contractors.

“Contractors are scrambling to find workers,” he said, adding there were fewer unemployed construction workers nationally last month than any other February in the 20 years that the government has been counting them.

Average hourly earnings in construction are $30.45, 10 percent higher than the private sector average, Simonson said.

If there is a worry, that is it: The expansion has been outrunning the supply of qualified workers.

Of the Georgia contractors surveyed, 57 percent said they had a bigger project pipeline than a year ago. At the same time, 83 percent said that finding and keeping qualified workers was their biggest business challenge. “And ultimately, that will be a headwind for development, raising costs and affecting the return on investment,” said Hazy at Bennett Thrasher.

When the economy was emerging from recession, the pool of workers was deep. Companies not only could be selective when hiring, they had the whip hand in any negotiations over pay. But after nearly a decade of expansion and an extended surge in construction, employers have a harder time filling open slots.

Moreover, contractors find their competitors trying to lure away workers to fill their own openings.

So, companies have raised worker pay by an average of 5 percent, while ladling on bonuses and benefits, said Thomas Jollay, also a co-leader of the Bennett Thrasher construction practice. "Base pay is up nominally, but bonuses are up significantly. There is definitely wage pressure."

Additionally, the cost of materials is rising. Yet the Georgia survey shows business profits still climbing — because they are passing along those higher costs.

In turn, higher price tags for building are fueling the rise of home prices and lifting rents in metro Atlanta. If the trend doesn't change, they will eventually dampen the Atlanta market, Jollay said.


Change in number of construction jobs since 2012

United States: up 29.3 percent

Metro Atlanta: up 54.9 percent

Source: Bureau of Labor Statistics

Number of construction jobs December 2018

United States: 7.4 million

Atlanta: 136,300

Source: Bureau of Labor Statistics