The construction sector added 25,000 jobs in May while the unemployment rate fell to its second-lowest rate for the month and pay levels in the industry continued to rise, according to an analysis of new government data the Associated General Contractors of America released June 2. Association officials said construction firms are boosting pay and taking other steps to recruit workers amid tight labor conditions.

“Demand for construction workers remains strong, outside of homebuilding,” said Ken Simonson, the association’s chief economist. “Contractors continue to report their primary challenge is finding qualified workers, not finding projects or most materials.”

Construction employment in May totaled 7,928,000, seasonally adjusted, an addition of 25,000, or 0.3 percent, from the month prior. The sector has added 192,000 jobs during the past 12 months, an increase of 2.5 percent. Nonresidential construction firms — nonresidential building and specialty trade contractors, along with heavy and civil engineering construction firms — added 22,100 employees in May. Meanwhile, employment at residential building and specialty trade contractors only grew by 2,500, or 0.1 percent.

The unemployment rate among job seekers with construction experience declined from 3.8 percent in May 2022 to 3.5 percent in May 2023, the second-lowest May rate in the 23-year history of the data. A separate government report reported that new hires in construction at the end of April totaled 460,000, growing 3 percent from one year prior. The new hires figure does not account for the number of workers who left the industry during the same timeframe.

Average hourly earnings for production and non-supervisory employees in construction — covering most on-site craft workers as well as many office workers — jumped by 6 percent over the year to $34.07 per hour. Construction firms in May provided a wage “premium” of nearly 19 percent compared to the average hourly earnings for all private-sector production employees.

Association officials said firms are boosting pay and taking other steps to recruit workers. But they noted that the federal government remains one of the biggest obstacles to construction workforce development by spending $5 to encourage students to pursue college degrees and service sector jobs for every dollar it invests in career and technical education.

“Construction demand is strong, firms are looking to hire, and federal officials are investing billions in construction and infrastructure,” said Stephen E. Sandherr, the association’s chief executive officer. “Yet that same federal government is doing its best to discourage students from pursuing high-paying careers in construction.”