A Sustainable Workforce Starts With You

AGC's Data DIGest: April 25-29, 2016

March data shows 12-month job gains in two-thirds of metros; highest pay rise since 2008

Editor’s note: Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

Construction employment, not seasonally adjusted, increased from March 2015 to March 2016 in 244 (68%) of the 358 metro areas (including divisions of larger metros) for which the Bureau of Labor Statistics (BLS) provides construction employment data, decreased in 70 (20%) and was stagnant in 44, according to an AGC release and map on Wednesday that analyzed BLS data. (BLS combines mining and logging with construction in most metros.) The Anaheim-Santa Ana-Irvine, Calif. division again added the most jobs during the past year (11,900 construction jobs, 14%), followed by New York City (9,000 combined jobs, 7%); Atlanta-Sandy Springs-Roswell (8,500 construction jobs, 8%); and Orlando-Kissimmee-Sanford (8,300 construction jobs, 14%). The largest percentage gains occurred in El Centro, Calif. (45%, 1,000 combined jobs); Monroe, Mich. (36%, 800 combined jobs); and Haverhill-Newburyport-Amesbury Town, Mass.-N.H. (28%, 1,000 combined jobs). The largest job losses occurred in Odessa, Texas (-2,700 combined jobs, -14%); followed by the Fort Worth-Arlington division (-2,600 combined jobs, -4%); and Cleveland-Elyria, Ohio (-2,500 combined jobs, -8%). The largest percentage declines again were in Bloomington, Ill. (-15%, -400 combined jobs); followed by Odessa; Grants Pass, Ore. (-13%, -100 construction jobs); Decatur, Ill. (-13%, -400 combined jobs); and Laredo, Texas (-13%, -600 combined jobs). Construction employment tied or set a new high for March in 31 areas, based on data back to 2000. (Not-seasonally-adjusted data should not be compared to other months.)

Compensation costs (wages, salaries and benefits, including required employer payments such as unemployment and workers compensation) in private industry in the first quarter of 2016 (2016Q1) increased 0.5%, seasonally adjusted (vs. 0.7% in 2015Q4), and 1.9% over 12 months, BLS reported Friday. Wages and salaries rose 0.6% in 2016Q1 (vs. 0.7% in 2015Q4) and 2.0% over 12 months. Compensation in construction increased 0.5% in 2016Q1 (vs. 0.7% in 2015Q4) and 2.3% over 12 months, the largest 12-month increase since 2008. Construction wages and salaries rose 0.5% in 2016Q1 (vs. 0.8% in 2015Q4) and 2.6% over 12 months, matching the December 2014-December 2015 period for the biggest 12-month gain since 2008.

Consultancy IHS and the Procurement Executives Group (PEG) reported on Wednesday that "construction costs fell in April....The headline current IHS PEG Engineering and Construction Cost Index...registered 48.5 this month, up from 44.6 in March. The headline index has been consistently below the neutral mark [in which a reading higher than 50 represents upward pricing strength; below 50, downward pricing strength] for 16 months. The current materials/equipment price index showed some improvement again, moving up from 41.8 in March to 47.5 in April. Although this sub-index has been registering falling prices for more than a year, it is now closer to the neutral mark....Nevertheless, only two materials posted rising prices and three materials registered neutral pricing. Despite the higher index figures, the remaining seven materials prices are still falling....The index for "subcontractor labor prices rose in April. However, the index figure continued to retreat [from 51.5 in February and] 51.0 in March to 50.8 in April. The sub-index has been above the neutral mark for the last six months, although it has been decreasing in the last four, indicating that the industry is seeing less pressure from labor costs."

The value of new construction starts in March dipped 1% from February's level at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Monday, based on data it collected. "Total construction starts had jumped 13% in February, led by a huge gain for the electric utility and gas plant category. While the dollar amount of electric utility and gas plant starts fell considerably in March, accompanied by a pullback for public works, the latest month featured a substantial [23%] increase for nonresidential building as this sector is providing more evidence that it's regaining upward momentum. In addition, residential building in March registered moderate [3%] growth, helped by the continued strength [15% growth] for multifamily housing. During the first three months of 2016, total construction starts on an unadjusted basis were...down 10% from the same period a year ago that included the start of several massive power plants and liquefied natural gas (LNG) export terminals. If the volatile electric utility and gas plant category is excluded, total construction starts on a seasonally adjusted basis in March would be up 4% from February, while the year-to-date comparison on an unadjusted basis would show just a modest 4% decline."

Gross domestic product, net of inflation (real GDP), increased 0.5% at a seasonally adjusted annual rate in 2016Q1, down from 1.4% in 2015Q4, the Bureau of Economic Analysis reported on Thursday. Private real nonresidential fixed investment in structures (including mining) tumbled at a 5.3% rate 2016Q1 and 5.1% in 2015Q4. There was considerable variation among private nonresidential structure types. Investment in commercial and health care structures jumped 28%, following a 1.2% rise. Investment in manufacturing structures slowed to a 3.1% rate from 9.3%. Investment in power and communication structures declined 6.1% after rising 2.6%. Investment in other nonresidential structures advanced 12% after a 3.0% decrease. Real residential fixed investment increased 15% and 10%, respectively, with multifamily investment shooting up 39% and 19%; single-family, 6.3% and 12%. Real government investment in structures soared at a 15% rate in 2016Q1 following an 8.5% rate of decrease in 2015Q4. The price index for GDP slowed to a 0.7% rate of increase from 0.8%. The price index for private nonresidential structures investment slipped 1.6% following a 0.1% dip. The price index for residential investment climbed 1.9% and 2.1%, respectively. The price index for government investment in structures fell 2.5% and 0.7%.

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