• AGC’s Data DIGest recap

    AGC’s Data DIGest recap

    Employment stumbles in February; spending falls in December but rises for full year

    Nonfarm payroll employment in February increased by 20,000, seasonally adjusted, from January and by 2,509,000 (1.7 percent) year-over-year (y/y) from February 2018, the Bureau of Labor Statistics (BLS) reported recently. The unemployment rate was 3.8 percent, down from 4.0 percent in January and from 4.1 percent in February 2018. Construction employment decreased by 31,000 for the month but rose by 223,000 (3.1 percent) y/y to 7,422,000, following an above-average increase in January (53,000) and amid widespread, unusually severe weather. Average hourly earnings in construction rose 3.1 percent y/y to $30.45, 10.1 percent above the average for all private-sector employees ($27.66, a 3.4 percent y/y increase). Theunemployment rate in construction, not seasonally adjusted, fell to 6.2 percent (from 7.8 percent in February 2018), and the number of unemployed jobseekers with construction experience declined to 588,000 (down from 732,000). These were the lowest February figures in the 20-year history of both series. (Not-seasonally-adjusted data may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.) The above-average increases in construction employment and pay relative to all industries suggest the drop in employment in February is more likely due to timing or difficulty finding qualified workers than a downturn in demand.

    Construction spending totaled $1.293 trillion at a seasonally adjusted annual rate in December, down 0.6 percent from November but up 1.6 percent from December 2017, the Census Bureau reported in a recent release that was delayed a month by the government shutdown. (January data is now scheduled for release on March 13.) For 2018 as a whole, construction spending totaled $1.298 billion, up 4.1 percent from 2017, following a 4.5 percent increase the year before. Public construction spending decreased 0.6 percent for the month but rose 4.2 percent y/y and 6.6 percent for the full year—a considerable turnaround from -3.2 percent in 2017. Of the three largest public segments, highway and street construction declined 0.9% for the month but increased 1.5 percent y/y and 4.2 percent for the full year; educational construction was flat for the month, up 7.9 percent y/y and up 3.8 percent for the full year; and transportation construction was down 1.5 percent for the month, up 7.5 percent y/y and up 15 percent for the year (37 percent for state and local airport construction and 1.5 percent for other public transportation—port, transit and passenger rail). Private nonresidential construction spending gained 0.4 percent for the month, 3.4 percent y/y and 3.5 percent for the full year, compared to 1.3 percent in 2017. Of the four largest components, power was unchanged for the month but rose 8.6 percent y/y and 3.9 percent for the year (comprising a 1.4 percent gain for electric power construction and 12 percent for oil and gas pipelines and field structures); commercial was down 1.0 percent for the month and down 4.6 percent for the year but up 2.0 percent for the year (with retail categories down 6.4 percent, warehouse up 15 percent and farm down 2.8 percent); manufacturing, up 1.7 percent for the month, 5.7 percent y/y and -1.7 percent for the year; and office, flat for the month, up 7.7 percent y/y and up 8.4 percent for the year­. Private residential spending slid 1.4 percent in December and 1.3 percent y/y but increased 1.1 percent for the year, compared to a 12 percent gain in 2017. New multifamily construction increased 3.1 percent for the month, 5.2 percent y/y and 0.7 percent for the year; new single-family construction slumped 3.2 percent in December and -5.0 percent y/y but increased 5.2 percent for the year; and residential improvements decreased 0.4 percent in December and increased 1.9 percent y/y and 1.5 percent for the year.

     Housing starts rebounded 19 percent at a seasonally adjusted annual rate of 1,230,000 units in January from a downwardly revised December rate (1,037,000 units, down 14% from November), the Census Bureau reported recently. (The report was delayed by the government shutdown from December 22 through January 25, which “could make it more difficult to determine exact start and completion dates,” the agency said.) Multifamily starts (five or more units), which are extremely volatile, rose 4 percent for the month but plunged 34 percent y/y. Single-family starts soared 25 percent in January and increased 4.5 percent y/y. Building permits rose 1.4 percent in January but declined 1.5 percent y/y. Multifamily permits increased 4.8 percent and 6.9 percent, respectively. Single-family permits in January slipped 2.1 percent from December and 6.7 percent y/y.

    Highway and street construction spending, which recovered from a 4.0 percent decrease in 2017 to a 4.2 percent gain in 2018, may be poised to move higher in 2019 and 2020. Investment research firm Thompson Research Group reported in its quarterly State Lettings Report that lettings in July through December 2018 in the 15 states it follows increased 13 percent y/y, with these changes by state:Arizona and California each up 68 percent, Colorado up 21.5 percent, North Carolina up 196 percent, South Carolina up 32 percent and Tennessee up 35 percent. Georgia and Texas were flat y/y while Florida and Virginia were off 57 percent and 45 percent, respectively

    “A letting is the actual process of awarding contracts to a general contractor and is the last step before construction begins. Once a contract is awarded, construction can begin in as little as one to three months, depending on the type of work. Construction may last from a month to 3-4 years or longer.” Governors or legislators in numerous states have proposed significant fuel or other tax increases, as well as greater use of tolling, to fund highway construction.

    The outlook remains dismal for retail construction. “Year to date, U.S. retailers have announced 4,810 store closures and 2,264 store openings,” Coresight Research reported on Thursday in its “Store Openings and Closures Tracker: Week 10.” That follows 5,528 closing that the firm tracked in 2018 and a record 8,139 in 2017. Closings lead to construction spending on reconstruction and improvements for new tenants but they are a negative overall for demand for retail construction.

    Leave a Reply

    Your email address will not be published. Required fields are marked *