Category: Construction Business


(from the Associated General Contractors of America)

Nonfarm payroll employment rose by 39,000, seasonally adjusted, in November, and private-sector payrolls grew by 50,000, the 11th straight monthly increase, the Bureau of Labor Statistics (BLS) reported on Friday. Construction employment, in contrast, remained in near-recession condition. It slipped to 5,615,000, 5,000 below a downwardly revised October total; 117,000 (2.0%) below the November 2009 total; and 2.1 million (27%) below the August 2006 peak of 7,725,000. Of the five BLS categories of construction employment, only heavy and civil engineering construction was higher than a year ago, gaining 0.2% for the month and 2.9% year-over-year with the help of federal spending on stimulus, base realignment and Gulf Coast hurricane protection projects. Employment among nonresidential building fell minimally in November and 1.1% over 12 months; nonresidential specialty trade contractors, -0.4% and -2.6%, respectively; residential specialty trade contractors, 0 and -3.0%; and residential building, +0.1% and -5.2%. Architectural and engineering services employment, a harbinger of future demand for construction, rose 0.2% for the month but slipped 0.9% year-over-year. The unemployment rate in construction was 18.8% in November, not seasonally adjusted, down slightly from 19.4% a year earlier but still the highest of any industry and double the all-industry rate of 9.3% (9.8%, seasonally adjusted; BLS does not publish seasonally adjusted industry rates). Average hourly earnings in construction rose 4 cents for the month and just 23 cents (0.9%) compared with November 2009, to $25.30, seasonally adjusted.

Among more than 18,000 U.S. employers who were asked about hiring plans in the first quarter of 2011, 14% plan to increase their workforce and 10% plan to cut it for a net employment outlook of 4%, not seasonally adjusted (9%, seasonally adjusted), Manpower Inc. reported on Tuesday. That was an improvement from the seasonally adjusted 5% or 6% in each of the last four quarters. Construction was the only industry out of 13 with a negative net outlook: -9% (10% of respondents expect to increase headcounts, 19% to cut them), compared with -8% in the fourth quarter outlook survey.

Employment rose in 182 metropolitan areas from October 2009 to October 2010, fell in 178, and was unchanged in 10, BLS reported on Tuesday. An analysis by AGC of BLS construction job data for 337 metro areas showed 67 with increases during the past year (the largest number of 12-month gains in two years), 224 with decreases, and 46 unchanged. BLS combines mining and logging with construction in some areas to avoid disclosing data about industries with few employers. Phoenix added the most construction jobs (4,100 jobs, 5%). Hanford-Corcoran, California, added the highest percentage (44%, 400 combined jobs). Other areas adding jobs included Kansas City, Kansas (1,700 combined jobs, 9%); Columbus, Ohio (1,700 combined jobs, 6%); Bethesda-Rockville-Frederick, Maryland (1,500 combined jobs, 5%); and Greeley, Colorado (1,400 combined jobs, 16%). The Chicago-Joliet-Naperville metro division of the Chicago region lost the most construction jobs (-19,200 jobs, -14%). Napa, Calif.(-1,100 jobs, -37%) lost the highest percentage. Other areas experiencing large declines in construction employment included Las Vegas-Paradise (-12,200 jobs, -21%); the Los Angeles-Long Beach-Glendale division (8,600 jobs, -8%); Northern Virginia (-8,000 combined jobs, -12%); the Philadelphia division (-6,500 combined jobs, -10%); and Riverside-San Bernardino-Ontario, Calif. (-6,500 jobs, -10%).

The number of job openings in October was 3.4 million, seasonally adjusted, up from 3.0 million in September, and an increase of 1.0 million (44%) from the trough in July 2009, BLS reported on Tuesday. But seasonally adjusted job openings in construction slumped to 56,000 in October, down from 71,000 in September and 65,000 in October 2009. The rate of hires in construction rose to 6.6 per 100 employees from 6.0 in September and 5.7 in October 2009. The rate of total separations in construction (quits, layoffs and discharges, and retirements and other) was 6.2 in October 2010, 5.9 in September and 6.6 in October 2009.

Bid prices for construction were flat from July to October, consulting firm Rider Levett Bucknall (www.rlb.com) reported on Thursday. Out of 13 cities,“Denver, Los Angeles, New York, San Francisco and Washington, D.C. experienced some quarterly inflation with overall construction costs rising by nearly 0.3%. Construction costs declined in Boston, Las Vegas, Phoenix, Portland and Seattle markets, with deflation of between 0.1% and 0.4%.”

Materials costs for construction appear headed higher. Copper futures on the Comex division of the New York Mercantile Exchange closed on Tuesday at the highest level since the record set in May 2008: $4.01 per pound, 26% higher than a year ago. The national average retail price of on-highway diesel fuel was $3.20 per gallon on Monday, the highest weekly level in two years and 15% above the year-ago mark, the Energy Information reported. Diesel fuel will average $3.23 in 2011, up 8.1% from an average of $2.98 in 2010, the agency said in its Short-Term Energy Outlook it released on Tuesday. Purchasing managers at manufacturing firms listed the following items used in construction products as having risen in price in November, the Institute for Supply Management reported on December 1: aluminum, copper, plastic resins, titanium dioxide, stainless steel and steel (steel was also listed as down in price).

New orders from U.S. manufacturers (other than semiconductor manufacturers) fell 0.9% in October, seasonally adjusted, after three consecutively monthly gains, the Census Bureau reported on Friday. Orders for construction materials and supplies were flat in October. Orders for construction machinery rose 3.5%.

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The producer price index (PPI) for finished goods increased 0.6% in October, not seasonally adjusted (0.4%, seasonally adjusted), and 4.3% since October 2009, the Bureau of Labor Statistics (BLS) reported on Tuesday. The PPI for inputs to construction industries, a weighted average of all materials used in construction plus items consumed by contractors (such as diesel fuel), rose 0.6% for the month, not seasonally adjusted, and 4.8% over 12-months. But prices charged by contractors for finished buildings and by subcontractors remained nearly flat, meaning they were having to absorb materials cost increases. Specifically, the PPI for new office construction fell 0.1% for the month and 0.4% over 12 months; industrial buildings, 0.2% and 0; warehouses, 0.5% and 0.2%; and schools, 0.3% and 1.2%. The PPI for nonresidential building work by roofing contractors rose 0.2% for the month but fell 2.6% year-over-year; concrete contractors, -0.3% and 0.2%; electrical, 1.0% and 0.6%; and plumbing, -0.4% and 1.6%. The materials price increases were driven by spikes in the PPIs for diesel fuel, 7.2% and 20%; copper and brass mill shapes, 5.4% and 15%; steel mill products, 1.4% and 12%; and aluminum mill shapes, 1.8% and 10%. Prices moderated or fell for plastic construction products, 0.7% and 2.0%; concrete products, 0 and -0.4%; gypsum products, -0.2% and 0; asphalt paving mixtures and blocks, -0.5% and 4.8%; and lumber and plywood, -0.9% and 6.7%.

   Several price increases for construction inputs have occurred or been announced since the PPI data were collected in mid-October. Crude-oil and copper futures moved to two-year highs last week before retreating in the past four days. The national average retail price of highway diesel fuel jumped this week to $3.18 per gallon, up 39 cents (14%) from a year ago, the Energy Information Administration reported on Monday. Several wallboard manufacturers announced price increases to take effect in December. But American Gypsum said it would not increase prices until March, and weak demand for building construction makes a December increase appear dubious. Similarly, one concrete supplier in Texas announced a $7-per-yard price increase for January 1 but it is not clear competitors or market conditions will sustain the change. On November 8 and 9, the leading makers of reinforcing bar products announced price increases of $20 per ton, effective on December 1.

   Nonfarm payroll employment increased by 151,000, seasonally adjusted, in October, including a 10th consecutive monthly increase in private-sector employment, BLS reported on November 5. Construction employment rose 5,000 in October and estimates were adjusted up by 3,000 for August and 16,000 September, but employment remained 122,000 (2.1%) below the year-earlier level and 2.1 million (27%) below the August 2006 peak. Of the five BLS construction employment categories, only heavy and civil engineering construction gained jobs over the past 12 months: 4,800 (3.5%). Nonresidential building contractors shed 12,200 (1.7%); nonresidential specialty trade contractors, 58,700 (2.8%); residential specialty trades, 51,900 (3.3%); and residential building, 28,500 (4.7%). Architectural and engineering services employment, a harbinger of future demand for construction, was flat for the month and down 14,300 (1.1%) over 12 months. These year-over-year declines were generally milder than in the past two and a half years. The unemployment rate for construction workers in October was 17.3%, not seasonally adjusted, down from 18.7% a year ago but higher than any other industry and nearly double the rate for all workers. Average hourly earnings in construction were $25.26 in October, seasonally adjusted, up just 0.7% from October 2009.

   Construction spending totaled $802 billion in September at a seasonally adjusted annual rate, up 0.5% from the downwardly revised August estimate of $797 billion but down 10% from September 2009, the Census Bureau reported on November 1. Public construction spending climbed 1.3% for the month and year. Of the two major public components, highway and street construction spending slipped 0.1% in September and edged up 0.4% over 12 months, whereas educational construction spending rose 1.6% for the month and fell 4.8% over the year. Private nonresidential spending fell 1.6% and 25%, with double-digit percentage decreases in the eight largest categories. In descending current size, the largest private types were power, -0.9% for the month and -22% over 12 months; commercial (retail, wholesale and farm), -2.6% and -21%; manufacturing, -4.8% and -37%; and health care, 0.7% and -13%. Private residential spending rebounded 1.8% in September after three months of steep declines but was down 6.3% year-over-year. Of the three types of residential spending, improvements to existing single- and multi-family construction jumped 6.2% for the month but dropped 4.6% year-over-year; new single-family, -2.6% and -0.1%; and new multi-family, 3.3% and -44%.

   Mixed indicators of future construction spending appeared this week. The American Institute of Architects reported today that the Architecture Billings Index (ABI), a gauge of the number of responding firms that with higher billings less those with lower billings in the prior month, fell to 48.7 in October from 50.4 in September, the first reading above the breakeven 50 mark since January 2008. Reed Construction Data reported on Tuesday that the value of nonresidential construction starts surged 30% in October from a “weak” September level but fell 9% short of the October 2009 mark. “Together, September-October starts were about at the monthly average for the 25 months since the September 2008 financial crisis,” said Chief Economist Jim Haughey.

 (from a recent report by the Associated General Contractors of America)

Temporary Public-Sector Construction Spending Boosts Commercial Construction Employment, Offsetting Declines in Residential Construction, Association Officials Note

Even as the number of people working in construction increased by 5,000 between September and October 2010, the industry’s unemployment rate rose to 17.3 percent, according to an analysis of federal employment figures released today by the Associated General Contractors of America. Temporary government investments boosted commercial construction employment, offsetting further job losses in residential construction, association officials noted.

“Despite significant help from programs like the BRAC and the stimulus, construction employment continues to lag behind much of the private sector,” said Stephen E. Sandherr, the association’s chief executive officer. “It is yet another indicator that the economy has a long way to grow before demand for new office buildings, retail centers and manufacturing facilities returns.”

Association officials noted that construction employment lagged behind other sectors of the economy. For example, while total private employment rose by 1.1 million during the past 12 months, the construction industry lost 122,000 jobs. Meanwhile, the industry’s unemployment rate is nearly double the unadjusted national rate of 9.5 percent.

Nonresidential construction fared relatively well in October compared to residential construction, association officials said. Nonresidential construction employment added 10,300 jobs since September, while residential construction lost 5,800 jobs. Nonresidential specialty construction added 7,300 jobs and heavy & civil engineering added 4,800 jobs. However, nonresidential building construction employment declined by 1,800 jobs between September and October.

The employment data is consistent with construction spending figures released earlier this week that showed increases in public construction spending offsetting continued declines in private-sector construction. Temporary federal programs like the stimulus and base realignment efforts were driving demand for construction workers from the specialty trades and heavy & civil engineering construction sectors. Meanwhile decreased private-sector activity contributed to the nonresidential building job losses.

While the stimulus has helped protect the construction industry from more severe job losses, construction firms were unlikely to significantly expand payrolls until the long-term market outlook improves, association officials said. They urged Washington officials to act on long-delayed water and transportation infrastructure programs and to provide the tax and regulatory relief needed to boost private sector economic activity.

“These modest job gains are likely to be as temporary as the programs that are driving them,” said Sandherr. “What this industry needs now is the certainty that comes with consistent tax, regulatory and federal infrastructure policies and the opportunity that comes from sustained and robust private sector economic growth.”