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AGC's Data DIGest: April 17-21, 2017

Annual job gains continue in March in most states; starts reports are contradictory

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Seasonally adjusted construction employment rose in 39 states from March 2016 to March 2017, held steady in West Virginia, and fell in 10 states and the District of Columbia, an AGC analysis of BLS data released today showed. Oregon again had the largest percentage gain (9.2%, 8,200 jobs), followed by Nevada (8.3%, 6,200), Rhode Island (8.2%, 1,500) and Florida (7.9%, 36,500). The most jobs added were in California (42,200, 5.5%), Florida and Texas (18,900, 2.7%). Mississippi had the steepest percentage loss (-10%, -4,800 jobs), followed by D.C. (-9.3%, -1,500) and Alaska (-6.6%, -1,100). Illinois lost the most jobs (-4,900, -2.2%), followed by Mississippi, Iowa (-2,000, -2.4%), Connecticut (-1,800, 3.0%) and D.C. For the month, employment rose in 17 states, shrank in 30 states and D.C., and was flat in Montana, North Dakota and Wisconsin. Employment set a record in Massachusetts and Texas. The small number of gains for the month may reflect extra hiring in February during widespread unseasonably mild weather. (AGC's rankings are based on seasonally adjusted data, which in D.C., Hawaii and five other states is available only for construction, mining and logging combined.)

Reports this week from Dodge Data & Analytics, ConstructConnect and the Census Bureau provided contradictory data on construction starts year-to-date (YTD), not seasonally adjusted, from the first quarter of 2016 (2016Q1) to 2017Q1. The value of construction starts rose 5% from February to March at a seasonally adjusted annual rate, Dodge reported today. "'The pattern for construction starts in early 2017, with three straight monthly gains, is the reverse of the three straight monthly declines that closed out 2016,' noted [Chief Economist Robert] Murray....'While the construction start statistics will frequently show an up-and-down pattern,...the improved activity in this year's first quarter provides evidence that the construction expansion is still proceeding....This year's first quarter has seen nonresidential building and public works rebound from the loss of momentum each experienced towards the end of 2016, helped respectively by the strong activity so far in 2017 for new airport terminal projects and new pipeline projects. Nonresidential building in 2017 should be able to stay on its upward track, supported by further growth for such institutional project types as school construction. As for public works, it's also expected to show improvement over the course of 2017, although its prospects are less certain given its connection to legislative developments at the federal level. This includes how Congress will deal with the continuing resolution for fiscal 2017 appropriations scheduled to expire at the end of April, and whether a new federal infrastructure program will get passed this year.'...The 3% decline for total construction starts on an unadjusted basis [YTD during 2017Q1] was due to a varied pattern by major sector. Nonbuilding construction dropped 17% [YTD], with electric utilities/gas plants down 72% while public works climbed 20% (reflecting the start of several large pipeline projects in early 2017). Residential building slipped a modest 1% [YTD], with multifamily housing down 18% while single family housing grew 9%. Nonresidential building registered a 7% gain [YTD], with institutional building up 35%, commercial building down 9%, and manufacturing building down 44%."

The value of nonresidential construction starts decreased 5.1% YTD through 2017Q1, data provider ConstructConnect reported on Wednesday. Nonresidential building starts (67% of the total) slumped 13%. Commercial building starts fell 7.7%; institutional building starts slid 17%; and the small industrial building starts segment tumbled 29%. Heavy engineering (civil) starts (33% of the total) jumped 17%.

Housing starts in March declined 6.8 % at a seasonally adjusted annual rate from the February rate but increased 8.1% YTD in 2017Q1, the Census Bureau reported on Tuesday. Single-family starts climbed 5.9% YTD. Multifamily (buildings with 5 or more units) starts soared 14% YTD. Building permits, a fairly reliable predictor over time of near-term starts, rose 3.5% for the month and 10% YTD. Single-family permits jumped 13% YTD. Multifamily permits increased 4.8% YTD.

The Architecture Billings Index (ABI) rose to a reading of 53.4, "up from a score of 50.7 in the previous month," the American Institute of Architects (AIA) reported on Wednesday. "This score reflects a sizable increase in design services." The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier less the percentage reporting lower billings; any score over 50 indicates billings growth. AIA says the index "reflects the approximate 9-to-12 month lead time between architecture billings and construction spending." The scores for the four practice specialties were mixed (based on three-month moving averages): residential (mainly multifamily), 54.6, up from 51.1 in February; mixed practice, 53.7, up from 50.7; institutional, 52.9, down from 53.2; and commercial/industrial, 49.8, down from 50.5.

"Economic activity increased in each of the 12 Federal Reserve Districts between mid-February and the end of March, with the pace of expansion equally split between modest and moderate," the Fed reported on Wednesday in the latest "Beige Book" (named for the color of its cover), a summary of informal soundings of businesses in each district. "On balance, reports suggested that residential construction growth accelerated somewhat even as growth in home sales slowed, in part due to a lack of inventory. Nonresidential construction remained strong, but became more mixed in some regions; leasing activity generally improved at a more modest pace....A couple of districts reported that worker shortages and increased labor costs were restraining growth in some sectors, including manufacturing, transportation, and construction....Price increases were noted for some building materials, such as lumber and concrete, whereas metal prices remained fairly stable."

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