Construction employment declined in May as 35,000 workers lost jobs, offsetting most of the increases the industry experienced in March and April, according to a new analysis of federal employment figures by the Associated General Contractors of America.

“Growing stimulus activity was clearly offset by weak private sector demand and diminished state and local construction budgets last month,” said Ken Simonson, AGC’s chief economist. “Unfortunately, construction employment is likely to remain both relatively low and unstable until at least early 2011.”

Construction employment declined from 5,626,000 to 5,591,000 between April and May 2010, Simonson said. Meanwhile, the construction unemployment rate, which is not seasonally adjusted, declined from 21.7 percent to 20.1 percent during the same period. With more than 1.7 million construction workers unemployed, Simonson said that the industry’s unemployment rate was still more than double the national rate and was the highest May rate since studies began in 1976.

Nonresidential construction employment was particularly hard hit in May, accounting for 28,100, or more than four out of five of the jobs lost in construction last month. Developer-financed construction investments, including office, retail and multi-family residential, have all declined in 2010.

As a result of high vacancy rates, private sector construction demand is likely to remain weak for some time, association officials said, adding that state and local construction demand would remain soft for longer considering the budget shortfalls for most state and municipal governments.

“With the temporary stimulus already starting to run its course, it is time for federal officials to act on the longer term infrastructure programs that will give construction workers a chance to make it through the protracted construction downturn,” said Stephen Sandherr, AGC CEO. “With construction prices low, now is the perfect time for Washington to modernize the nation’s aging transportation, water and building infrastructure.”