Data Centers Drive Construction Hiring in September as Residential Jobs Slide

Residential construction lost a net 4,900 jobs. Residential specialty trade contractors shed 7,900 workers, partially offset by a 3,000-job increase among residential builders.

Construction gains came as U.S. employers added just 29,000 jobs overall in September, and the national unemployment rate rose to 4.2% from 4.1% in August. Economists surveyed by Dow Jones had expected 84,000 new jobs and unemployment to remain at 4.1%.

BLS also revised July and August payroll growth down by a combined 60,000 jobs, with July’s previously reported 21,000-job gain becoming a loss of 10,000.

“The construction industry added jobs for the seventh straight month in September,” ABC Chief Economist Anirban Basu said in a statement. “Industry employment growth is increasingly concentrated on the nonresidential side as the data center boom continues to support rapid hiring of certain specialty trade contractors.”

Over the past year, nonresidential construction employment has increased by 142,000 jobs, or 2.9%, while residential construction has lost 32,800 jobs, or 1%, according to ABC’s analysis. Overall construction employment reached 8.364 million in September, up 109,000 jobs, or 1.3%, from a year earlier.

Employment also increased among firms on the design side of the industry. Architectural, engineering and related services added 5,800 jobs in September, bringing employment in the category to nearly 1.779 million.

The construction unemployment rate was 3.5% in September, compared with 3.8% a year earlier, according to BLS. The industry unemployment figures are not seasonally adjusted.

Construction wages also continued to rise faster than those of the broader private sector. Average hourly earnings for construction workers reached $41.69 in September, up from $40.01 a year earlier, a 4.2% increase. Private-sector hourly earnings rose 3% over the same period, to $37.81 from $36.70.

Job Growth Varies Widely by Metro

Construction employment increased in 177 of 360 metro areas, or 49%, during the 12 months through August, according to a Sept. 30 Associated General Contractors of America analysis of BLS data. Employment declined in 126 metros and was unchanged in 57.

“Data centers, power projects and advanced manufacturing plants are spurring employment gains in many metros,” AGC Chief Economist Ken Simonson said in a statement accompanying that analysis. “But other locations are experiencing a loss of jobs as volatile tariffs, rising materials costs and harsh immigration policies deter owners from committing to new construction.”

Houston-Pasadena-The Woodlands, Texas, added 14,100 construction jobs, or 6%, through August, the largest numerical increase, while Baton Rouge, La., led percentage gains at 29%. Atlanta’s metro division lost 4,900 jobs, or 4%, the largest numerical decline, followed by Riverside-San Bernardino-Ontario, Calif., down 4,600, or 4%.

Despite the residential losses and weakness in the broader labor market, Basu said contractor hiring expectations remain elevated, according to ABC’s Construction Confidence Index, “an outlook that seems justified given the insatiable demand for new data centers.”