Dive Brief:

• Construction employment's upward trend slowed last month as the industry added 6,000 jobs in March, the Bureau of Labor Statistics reported Friday.
• The month's total construction employment of 6.882 million represented a 177,000-position — or 2.6% — increase from March 2016.
• Within the industry, the residential sector lost 7,600 positions last month, while nonresidential (including the heavy civil and engineering sectors) added 13,300 net new jobs to the month's figures, according to the Associated Builders and Contractors.

Dive Insight:

The slowdown in construction employment growth follows a strong showing in the first two months of 2017, which notched almost 100,000 combined new jobs and set a record in February for the strongest recorded level since March 2007. After averaging 47,000 net new jobs for the first two months of the year, March's figures come as a disappointment to industry observers who were hopeful for sustained growth in the sector.

Despite a drop-off in residential construction employment, the nonresidential segment's growth — particularly in the face of March's colder weather conditions — shows promise for the industry, particularly when it comes to specialty trade contractors working on commercial construction developments as well as heavy and civil engineering projects, according to ABC Chief Economist Anirban Basu.

Construction firms are still likely to see an increase in projects as employment in the industry gets a much-needed boost during the persisting labor shortage. Construction in both the commercial and residential sectors picked up in February, which could support optimism for new project growth. The month's architecture billings swung back into positive territory, with economists forecasting a rise in design activity in the coming months. Housing starts also saw an uptick in activity, reporting a 3% rise in February on the back of single-family starts and reflecting the second-highest rate of starts in a decade.

As projects pick up, contractors have expressed plans to expand their staffs. Nearly three-quarters of the 1,281 contractors surveyed by the Association of General Contractors in January reported a desire to boost their headcounts in the coming year, though the same percentage said they had trouble finding both wage and salaried workers.

Basu noted that acquiring skilled workers isn't likely to become easier, forecasting that the labor shortage may become more acute as the year progresses. Basu said contractors can expect to pay higher wages, especially as firms taking on new projects struggle to assemble qualified project teams.