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AGC's Data DIGest: April 15 – April 19, 2013

More than half of states add construction jobs in March; Reed, MHC differ on starts

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Click here to view March state employment numbers.

In March, seasonally adjusted nonfarm payroll employment increased from a year earlier in 49 states and the District of Columbia and dipped by 0.1% (5,800 jobs) in Pennsylvania, the Bureau of Labor Statistics (BLS) reported Friday. Seasonally adjusted construction employment climbed in 31 states and the District of Columbia and fell in 19 states. Alaska had the largest percentage increase (11.4%, 1,900 jobs), followed by Hawaii (10.7%, 3,100 jobs), Utah (8.7%, 6,000 jobs) and Louisiana (8.6%, 10,700 jobs), AGC reported. California added the most new construction jobs over the past 12 months (41,000, 7.1%), followed by Texas (39,800, 6.9%). Rhode Island lost the highest percentage (-9.6%, -1,600 jobs), followed by Montana (-8.1%, -1,900 jobs). Ohio lost the most jobs (-9,500, -5.2%), followed by Illinois (-8,500, -4.4%). From February to March, seasonally adjusted construction employment rose in 30 states, and fell in 20 plus D.C. (BLS combines mining and logging with construction in D.C., Hawaii and five other states to avoid disclosing data about industries with few employers.)

Reports Friday from Reed Construction Data and McGraw-Hill Construction (MHC) paint divergent pictures of new construction starts in March and the full first quarter of 2013 compared with the same periods in 2012, based on data they separately collected. Reed reported that nonresidential starts for the first three months of 2013, not seasonally adjusted, were 16% higher than a year ago. Commercial starts were up 8% year-to-date; industrial (manufacturing) starts, +27%; institutional, +14%; and heavy engineering (nonbuilding), +23%. “The value of starts in March rose 8% from February at a seasonally adjusted annual rate,” including residential starts, but the unadjusted three-month total was unchanged from the first quarter of 2012, MHC reported Friday. Nonbuilding (public works and electric utilities) starts jumped 42% from a month earlier but tumbled 23% year-to-date; residential, -1% and +33%, respectively; and nonresidential building, -2% and -9%.

A quarterly survey of “contractors at major construction firms across the U.S.” released Friday by Thompson Research Group found “79% reported an increase in bidding activity [year-over-year], up meaningfully from 49% in our prior quarterly survey....54% reported margin improvement [year-over-year] vs. a paltry 26% in our last quarterly survey...the percentage of private backlogs (vs. public) is 62%, up from 54% last survey.”

Informal soundings of businesses in the 12 Federal Reserve districts “suggest overall economic activity expanded at a moderate pace” from late February to early April, the Fed reported on Wednesday in the latest Beige Book, so named for the color of its cover. “Strength in residential construction spurred manufacturing increases in several districts….firms in the San Francisco district saw an increase in demand for steel products used primarily in transportation infrastructure and nonresidential construction projects….New home construction continued to pick up in most districts, although the Richmond district said that a low supply of residential building materials had stalled construction. Only the Philadelphia district noted that residential construction decelerated somewhat, although home sales were still growing moderately. Multifamily construction increased in several districts including Boston, Chicago and San Francisco….Commercial real estate and construction activity improved in most districts. [Boston district] contacts said the construction of mixed-use projects was picking up….The Philadelphia district commented that there was not much change in nonresidential activity during the reporting period, but that contracts for repair work from Hurricane Sandy have yet to be approved. Contacts in the Richmond district said there were several large [office] projects under construction in the Washington D.C. area. Commercial construction saw widespread improvement with the New York, Atlanta, St. Louis, Minneapolis and Kansas City districts noting increases….Several districts noted robust demand for workers tied to the residential construction sector, including Philadelphia, Cleveland, Dallas and San Francisco….Several districts reported wage pressures in sectors experiencing labor shortages, such as information technology, construction and engineering….Several districts, including Boston, Philadelphia, Cleveland, Minneapolis, Kansas City and San Francisco, said prices for some construction materials rose since the last report, but there were few reports of pass-through.”

Census data released on March 26 showed that in 2012, “State revenues were up by 4.9% year-over-year,” the Gerdau Market Update noted on April 11. “Revenues have been growing in the 3% to 5% range for six consecutive quarters. The growth of local revenues slowed to 0.8%. [The] growth of state tax revenues is almost back on track but because local taxes are mainly property based, their growth rate has not recovered. However, there is a much greater underlying problem than these growth rates indicate. At the end of 2012, state taxes were about $150 billion and local revenues about $100 billion below where they would have been if there had not been a ‘Great’ recession. This money will never be recovered which means that state and local governments have to make permanent structural changes to the expense side of the ledger.”

The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at www.agc.org/datadigest.

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