2017 was a great year to be employed in the construction and manufacturing sectors. And if President Trump and Congress push for infrastructure spending, this year could be even better.
The government said Friday that the construction industry added 30,000 jobs last month, with a big chunk coming from the hiring of more specialty trade contractors, like plumbing and electrical work. Manufacturers added 25,000 jobs.
Construction and manufacturing combined added 406,000 jobs for all of last year.
This is clearly a sign that the broader economy remains in healthy shape. Consumers are spending. Corporate profits are rising.
So what’s next? If infrastructure really does become a political priority, as Trump has promised, then spending on roads and bridges should lead to even more jobs in construction and manufacturing.
Some construction and manufacturing firms have been unable to find as much skilled labor as they need. These businesses will have to ramp up hiring — and probably pay more — if big federal contracts are on the line.
“If we see anything with infrastructure spending from Trump, we will get even more hiring and wage growth simply because of the shortage of workers in construction,” said Quincy Krosby, chief market strategist at Prudential Financial.
Of course, it’s not clear whether an infrastructure bill will come together. But manufacturing and construction may stay busy anyway.
Kjersti Haugland, chief economist at DNB, noted that the U.S. housing market is robust. As long as that continues, there will be ample demand for construction workers and makers of building materials.
“We don’t expect an imminent downturn in housing. The market should remain strong,” Haugland said.
And Michael Materasso, senior vice president and co-chair of Franklin Templeton’s Fixed Income Policy Committee, noted that there are still plenty of “shovel-ready” projects tied to rebuilding efforts in Texas and Florida after last year’s hurricanes.
But Materasso added that any increase in federal infrastructure spending has the potential to lead to even more jobs — and not just short-term construction and manufacturing jobs.
Improving the transportation system in the United States could lead to better economic growth overall simply because workers could spend less time commuting and more time working.
“If you are replacing a bridge, that creates even more economic activity for the long-term and more spending and more jobs,” Materasso said.
President Trump probably deserves some credit for the job gains in manufacturing and construction, too.
More businesses have announced plans to bring blue-collar jobs back to America in the past year, partly from a classic approach of carrots (lower taxes and relaxed regulations) and sticks (vitriolic Trump tweets targeted at specific companies).
Aaron Anderson, senior vice president of research at Fisher Investments, said political pressure may be one reason for the resurgence in U.S. manufacturing and construction jobs.
But the bigger issue is that it simply makes more financial sense to hire in the United States now that China and other emerging markets are starting to pay workers more. That gives blue-chip American companies less incentive to move jobs to other countries.
“Some companies may want to curry favor with Trump. There is a little bit of political pressure,” Anderson said. “But it really is the improving competitiveness of American manufacturing that drives more jobs onshore. It’s more economics than politics.”