Cleveland, Chattanooga add more construction jobs

Southeast Tennessee showed the fastest growth in construction jobs in Tennessee over the past year, rising more than twice the pace for builders nationwide and four times faster than the economy as a whole.

But even after seven years of year-over-year growth in construction, the number of Chattanooga area jobs in construction is still below the pre-recession peak reached more than a decade ago.

Ken Simonson

"This area has shown strong growth in employment in the past year, better than in most of the state and far better than the economy as a whole," Ken Simonson, chief economist for the Associated General Contractors of America, told the local AGC chapter here Wednesday. "We expect to continue to see growth this year in construction spending and employment, anywhere from 1 to 5 percent, but we're still not back to the peaks we saw before the recession."

Simonson is a spokesman for the National Association of Business Economists and the top economic forecaster for the The Associated General Contractors, which represents more than 27,000 members across the country, including more than 200 member companies in the AGC of East Tennessee - one of 89 AGC chapters in the country.

Nationwide, Simonson said the number of persons employed in the construction industry rose 3.3 percent in the 12 months ending in March, or twice the employment growth for the economy as a whole. It rose 6 percent in that period in metro Chattanooga and jumped 13 percent in metro Cleveland - the highest among the 10 major metro cities in Tennessee.

"We're seeing good growth in our area and our builders are busy, but we would like to see even more," said Jimmy Lail, vice president of Raines Brothers Inc., and president of the AGC of East Tennessee chapter.

Construction spending nationwide plunged by 38 percent over a 5-year period, before starting its current rebound in January 2011. Spending reached a new high this year, but adjusted for inflation spending on construction is still below the 2005 peak and the nationwide total employment in the construction industry of 7.2 million workers is still below the 7.7 million peak reached more than a decade ago.

The severity and length of the building downturn pushed many workers out of construction. As a result, a new survey of 1,000 builders nationwide found that 71 percent are now having trouble filling hourly construction positions, even after 60 percent of the contractors said they had increased their base pay.

Pay is going up, on average, by more than 3 percent in the construction industry this year, while some material costs are rising by more than 5 percent. Despite the higher costs and interest rates, Simonson said he doesn't foresee any economic downturn anytime soon, unless all the talk about tariffs and import quotas sparks a trade war and materials like steel, aluminum and lumber go up more in price or become more restricted in supply.

"The outlook, I think, does remain positive for building, especially for manufacturing, warehousing, airports and data centers," Simonson said. "If anything could knock down our growth I think it could be a trade war," he said

The growth in commercial building this year is coming primarily from warehouses or distribution centers, such as the massive Amazon fulfillment centers added in Chattanooga in the past decade in Chattanooga and Charleston, Tenn.

Although apartment building has been strong for a number of years, Simonson said he expects such building to be flat this year, or even down among luxury apartment units, because of a potential glut in such units in some markets.

"Multi-family building still has room to run with many young people opting to rent, rather than buy their homes, but I think it may take a breather this year," Simonson said.

Contact Dave Flessner at dflessner@timesfreepress.com.