NFIB: Construction Industry Effects on Small-Busin
Washington, DC, October 18, 2006--The National Federation of Independent Business' Chief Economist William Dunkelberg issued the following statement today on construction firms and small-business optimism.
The employment figures cited by Dunkelberg are from the September 2006 NFIB Small Business Economic Trends Report, which was released October 10 and is available at www.nfib.com/research.
"Construction firms (not just home builders) make up more than 10 percent of NFIB's membership. As the home building industry slows, a number of economic observers have wondered if the so-called demise of housing will drag down the rest of the economy. Although optimism among owners of construction firms has at times exceeded that of owners in other industries, for the most part, firms in the construction industry have not 'bubbled' much beyond their counterparts in other industries so far this year. Overall, there has been slowing in construction, but the industry is still above the average for the entire small-business sector.
"At the beginning of the year, owners of construction firms were in fact less optimistic than the general population of owners. By February, there was no difference in optimism. In March, April and May, the Optimism Index for construction firms exceeded that of other owners; in June and July the Index for construction was lower, then higher again in August and September. Over the nine months, the Index for construction has averaged 1.5 points above the average for all firms (including the construction industry; not seasonally adjusted)."
"Looking at plans to create new jobs and job openings, the construction industry has been much stronger than the population of owners as a whole. However, plans to increase the construction labor force have faded, finally equaling the owner population average in September. The percent of construction owners with hard-to-fill job openings has exceeded the percent in the general population every month this year.
"The construction industry is still stronger than the overall small-business economy and has slowed the economy only as it converges to the performance of the rest of the small-business sector. There are many reasons for this, including the fact that it will still be a good housing year, following record performances in earlier years. Furthermore, business construction remains strong, so firms find work in endeavors other than building new homes and condos. There will be work in New Orleans and the hurricane-affected region for some time to come."
