Construction employment fell in May by 28,000, the largest decline in two years, and is now at the lowest level since last August, according to an analysis of federal data by the Associated General Contractors of America.

The drop in construction employment comes as new figures show a 1.4 percent decrease in public construction spending restrained overall construction activity growth to 0.3 percent, AGC said.

“With construction employment shrinking for the fourth month in a row, the industry is clearly having a difficult start to the year,” said Ken Simonson, the association’s chief economist. “In particular, cuts to public sector investments in construction are taking their toll, given that heavy and civil engineering construction experienced the largest employment decline within the sector.”

Total construction employment now stands at 5,516,000, or 0.5 percent lower than a month earlier but 18,000 higher (0.3 percent) than in May 2011, Simonson said. Meanwhile the industry’s unemployment rate is at 14.2 percent. He added that overall construction employment is still far below its peak level of 7,726,000 in April 2006.

The nonresidential construction sector lost 17,400 construction jobs in May, Simonson said. Heavy and civil engineering construction firms — which perform a large share of publicly funded construction work — shed 11,200 jobs, while nonresidential specialty trade contractors lost another 7,700. Nonresidential building contractors added 1,500 for the month. Residential construction lost 11,000 total jobs as the residential specialty trade contractors shed 10,000 jobs and residential builders lost 1,000 positions in May.

Association officials said the new construction employment and spending figures underscore the need for quick congressional action on a number of long-term infrastructure measures, including reauthorizing clean water and surface transportation programs.

“Getting a highway and transit bill passed would certainly help counter any possible backslide in construction employment,” said Stephen E. Sandherr, the association’s chief executive officer. “While the overall economy will need to be much stronger before private sector construction activity and employment begin to approach pre-recession levels, investments in infrastructure will certainly help put more construction workers back on the job.”

APRIL'S REPORT

Commerce Department data released for April painted a brighter picture, with U.S. builders increasing their spending on construction projects for a second month. A pickup in home construction and commercial projects offset a fifth consecutive decline in government spending.

Construction spending rose 0.3 percent in April, matching an upwardly revised 0.3 percent March gain, according to the department. The consecutive gains pushed spending to a seasonally adjusted annual rate of $820.7 billion. That is 7.6 percent above a 12-year low hit in March 2011.

Still, the level of spending is roughly half of what economists consider to be healthy. Residential construction rose 2.8 percent in April, the best showing in six months, to an annual rate of $256.1 billion. Recent data shows that housing has stabilized after years of weakness following the collapse of the housing boom.