Employment in the U.S. construction sector declined in February, reflecting continued volatility in the industry as economic uncertainty and slowing construction spending weigh on hiring activity.
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According to an analysis by Associated Builders and Contractors (ABC), the industry lost 11,000 jobs during the month, based on newly released data from the U.S. Bureau of Labor Statistics.
Despite the monthly drop, the sector still recorded modest annual growth, adding 42,000 jobs year over year, representing an increase of about 0.5% in overall construction employment.
Within the industry, job losses were concentrated primarily in nonresidential construction, which saw employment decline by 3,800 positions in February.
Two of the three main subcategories posted declines during the month:
However, the nonresidential building segment offered a partial offset by adding 4,100 positions, suggesting that demand for certain commercial construction projects remains relatively stable.
Industry analysts note that the variation across sectors highlights how different segments of construction are responding unevenly to economic conditions, interest rates and project pipelines.
The data also showed that the construction unemployment rate reached 6.9% in February, reflecting softer labor conditions within the industry.
Across the broader economy, unemployment increased to 4.4%, which is 0.2 percentage points higher than the same period last year.
Economists say rising unemployment across sectors could signal cooling economic momentum, though labor markets in several industries remain relatively resilient.
Construction employment trends have been under pressure in recent months as developers and contractors navigate higher borrowing costs, fluctuating materials prices and geopolitical uncertainties affecting global markets.
“Construction employment shrank again in February and has now declined in 8 of the past 11 months,” said Anirban Basu. “Both the residential and nonresidential segments lost jobs for the month, adding to a recent string of downbeat industry data releases; construction spending has been in decline for several quarters, and ABC’s Construction Backlog Indicator fell to a four-year low in January. With the conflict in Iran adding to trade policy-related uncertainty and crude oil prices well above $80 per barrel, the industry’s outlook remains downbeat through the first few months of 2026.”
Recent industry data suggests the slowdown may not be limited to employment.
ABC’s Construction Backlog Indicator, which measures the amount of contracted construction work yet to be completed, dropped to its lowest level in four years in January. A shrinking backlog can signal that contractors are securing fewer new projects, which may lead to reduced hiring in the months ahead.
At the same time, construction spending has been declining for several quarters, reflecting cautious investment decisions by developers and project owners.
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Higher interest rates have also affected real estate financing and infrastructure development, making some large projects more difficult to move forward.
While the industry continues to face near-term headwinds, some analysts believe long-term demand for construction could remain strong due to infrastructure spending, manufacturing expansion and housing shortages in certain markets.
Federal infrastructure initiatives and industrial development projects may eventually help offset declines in private construction activity.
However, economists say the pace of recovery will depend heavily on broader economic conditions, including inflation trends, energy prices and global trade developments.
For now, the February employment figures highlight the ongoing challenges facing contractors and developers as the construction industry navigates an uncertain economic environment.
Originally reported by Larry Adams in Wood Working Network.
