The U.S. construction industry continued to add jobs in March, outpacing other sectors in employment growth thanks to strong wage increases—but new tariffs introduced in April are threatening to reverse that momentum, according to an analysis from the Associated General Contractors of America (AGC).

The latest federal employment data shows that the construction sector added 13,000 jobs in March, bringing total industry employment to 8,313,000 on a seasonally adjusted basis. Over the past 12 months, construction employment has grown by 143,000 jobs—or 1.8%—outpacing the overall nonfarm payroll growth rate of 1.2%.

“Contractors added employees at a faster clip than other sectors in March, as pay for construction craft workers outpaced wages for production workers in the overall private sector,” said Ken Simonson, the association’s chief economist. “However, as steep new tariffs and foreign countries’ retaliatory measures take effect, building costs will rise and projects will be put on hold, posing a threat to employment.”

Construction wages continued to rise, with average hourly earnings for production and nonsupervisory employees reaching $36.79—an increase of 4.1% over the past year. That outpaced the 3.9% year-over-year increase for similar private sector workers, reflecting the sector's urgency in filling labor shortages and retaining skilled craft workers amid a tight labor market.

Still, the March employment numbers showed a mixed picture across different construction segments. Nonresidential construction firms led job growth, adding 22,300 positions. This included 19,300 new jobs among specialty trade contractors and 3,400 in heavy and civil engineering construction. That strength offset a decline of 400 positions in nonresidential building construction.

Meanwhile, residential construction faced a setback. Overall, residential employment declined by 9,800 jobs. While residential building construction firms added 3,100 positions, residential specialty trade contractors shed 12,900 jobs, signaling a possible slowdown in the housing market.

Despite these mixed results, the unemployment rate for construction workers with recent experience remained steady at 5.4%, the same as a year ago. According to Simonson, this suggests that firms are holding onto skilled workers, even as new hiring, job openings, and project spending show signs of slowing.

Industry leaders say the job gains in March were bolstered by increased public investment in infrastructure and construction, part of broader federal and state-level funding efforts.

“The construction sector grew at a steady clip in March, buoyed in large part by robust public-sector investments in construction activity,” said Jeffrey D. Shoaf, the association’s chief executive officer. “The real question is how the newly announced tariffs will impact the industry in the short and long-term.”

On April 2, the Biden administration announced sweeping new tariffs on nearly every major U.S. trading partner, citing efforts to protect domestic industries. But the AGC warned that higher import costs—especially for materials like steel, aluminum, equipment, and construction components—could result in project delays or cancellations. This in turn could suppress job growth and increase financial uncertainty for contractors.

“While we’re encouraged by March’s numbers, we’re bracing for what’s ahead,” said Shoaf. “As developers and public officials evaluate their budgets in light of rising material prices, we could see hesitation around breaking ground on new projects.”

Association officials added that while the long-term impact of the tariffs remains to be seen, including the potential for an uptick in domestic manufacturing construction, the immediate concern is how rising costs may cause developers and public agencies to hit the brakes.

For now, the construction sector continues to outperform many others in terms of wage growth and job creation—but with economic headwinds in the form of tariffs and global trade tensions, that growth may not be guaranteed in the months ahead.

Originally reported by The Mecklenburg Times.