Construction employment continued to recover in July, adding 20,000 jobs, but the pace of the industry’s rebound slowed markedly from its much stronger jobs gains for May and June, the Bureau of Labor Statistics has reported.

Construction economists see some worrisome signs ahead, including state and local governments' ailing budgets and project cancellations and postponements in the office, hospitality and retail areas, as the coronavirus pandemic persists.

The latest BLS monthly report on U.S. employment, released on Aug. 7, also shows that construction’s July jobless rate improved to 8.9% from June’s 10.1% but was more than double the year-earlier level of 3.8%.

All but one of the construction sectors gained jobs in July, led by residential building, which added 16,300 positions. The specialty trade contractors segment recorded an increase of 11,200.

But nonresidential building lost 9,300 jobs during the month. Heavy and civil engineering construction, which includes infrastructure projects, posted a modest increase of 1,800 jobs.

Anirban Basu, Associated Builders and Contractors' chief economist, noted in a statement that the decline in nonresidential sector jobs comes as contractors have seen increased notices of postponed and cancelled projects. "At the same time,"  Basu added, "there appears to be a growing amount of work modifying existing structures."

He said building modifications may explain some of the gains in the specialty trades contractors category, which includes workers on air-handling system.

Ken Simonson, Associated General Contractors of America's chief economist, said in a statement, "It is likely that many nonresidential jobs are in jeopardy following the completion of emergency projects and ones begun before the pandemic."

AGC officials say that federal officials must act soon to pass and enacted infrastructure funding legislation and other coronavirus relief and recovery measures.

Construction saw its total employment plunge by slightly more than 1 million in April, due to the pandemic's impact.

The industry bounced back significantly in May, adding 456,000 positions, followed by a gain of 163,000 in June, according to newly revised BLS figures.