Construction Job Growth Lags in S.C., Surprising Experts

Richard Breen

Wednesday, December 13th, 2017

During another year of steady job growth and low unemployment in South Carolina, one industry has stumbled.

“Perhaps the biggest surprise in 2017 has been the slowdown in construction,” said research economist Dr. Joseph Von Nessen during the University of South Carolina’s recent Economic Outlook Conference.

Von Nessen pointed out that after being the state’s leading industry in 2016, the construction sector lost jobs in recent months while manufacturing and professional/business services picked up the slack. He attributed it to a long-running trade dispute with Canada.

“We’ve seen import tariffs placed on Canadian lumber,” Von Nessen said. As a result, he said, lumber prices are up 23 percent.

In a conversation with South Carolina CEO, construction industry executive Brian Gallagher agreed that the costs of building materials are rising – cement and steel as well as lumber – but attributed much of that to increased demand.

The lack of construction job growth may also be a function of demand.

“A lot of that is folks can’t find people to fill the open positions,” said Gallagher, who is vice president of marketing with Greenville-based O’Neal Inc. and 2017 chairman of the trade group Associated Builders and Contractors of the Carolinas. “That’s impacting the ability to get projects done.”

Gallagher said ABC of the Carolinas is engaging in outreach programs to find potential construction workers.

“We’re putting a big focus on apprenticeship programs,” he said. “We’re trying to do a lot of things to introduce people to the construction profession.”

One of the most prominent construction projects in the state, the expansion of the V.C. Summer nuclear facility in Fairfield County, left thousands of workers without a job. There was an immediate jump in initial unemployment claims and the August unemployment rates in Fairfield, Newberry and Richland counties showed significant increases.

“There’s wasn’t much of an uptick at all in continued claims” during subsequent weeks, however, Von Nessen said.

He said it’s an indicator that most of the laid-off Summer workers either quickly found new work locally or left the state for work elsewhere.

“We are very resilient right now in the Midlands – and in the state more generally,” Von Nessen said.

The American Institute of Architects’ Architectural Billing Index is considered a leading indicator of nonresidential construction activity. The October index showed an increase in billings and strong interest in new projects.

“I think it bodes well for the future of construction activity in the Carolinas,” Gallagher said. “I think 2018’s going to be a real solid year for construction and 2019’s going to be even better.”

It may not take an economist to do the math.

“Just look at the number of tower cranes in our cities,” Gallagher said. “That gives you a good idea of what’s going on.”

As for residential construction, Von Nessen said that despite rising lumber costs, “we’re also seeing very strong demand at the same time,” offsetting potential negative impacts.

Housing starts and building permits are up, Von Nessen said, as is home price appreciation. Prices across the state are up more than 5 percent, with the Charleston area closer to 10 percent.

“This is a healthy housing market,” he concluded.