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AGC's Data DIGest: August 10-21, 2015

States add jobs in July but at slower rate than before; PPIs for construction demand rise

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Seasonally adjusted construction employment rose in 37 states and the District of Columbia from July 2014 to July 2015, declined in 12 states and held steady in Vermont, an AGC analysis of Bureau of Labor Statistics (BLS) data released today showed. The year-over-year gains were widespread but less so than in the previous 12 months, when 47 states and D.C. added construction jobs. California again gained the most construction jobs (48,900 jobs, 7.3%), followed by Florida (26,500, 6.6%), Washington (15,300, 9.6%), Texas (14,500, 2.2%) and Michigan (12,400, 8.7%). Arkansas added the highest percentage of new construction jobs (15%, 6,800), followed by Idaho (14%, 4,900), Nevada (11%, 6,800), Washington and Michigan. The steepest percentage losses again occurred in West Virginia (-16%, -5,400), followed by Rhode Island (-7.9%, -1,300), Ohio (-7.0%, -13,800), Mississippi (-4.3%, -2,100) and Indiana (-4.1%, -5.1). Ohio had the largest losses, followed by West Virginia, Indiana and Mississippi. For the month, there were gains in 28 states and D.C., losses in 21, and no change in Virginia. (BLS combines mining and logging with construction in D.C. and six states to avoid disclosing data about industries with few employers.)

The producer price index (PPI) for final demand increased 0.3%, not seasonally adjusted (0.2%, seasonally adjusted), in July but declined 0.8% over 12 months, the Bureau of Labor Statistics (BLS) reported on August 14. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 34% of total construction. The PPI for final demand construction, not seasonally adjusted, rose 0.5% in July and 2.0% over 12 months. The overall PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of five categories of buildings—climbed 2.1% since July 2014. The 12-month increases ranged from 1.2% for healthcare construction to 1.7% for warehouses, 2.1% for industrial buildings, 2.2% for schools and 2.4% for offices. PPIs for new, repair and maintenance work on nonresidential buildings was unchanged for plumbing contractors from July 2014 to July 2015 and rose 2.0% for roofing contractors, 3.2 % for concrete contractors and 3.9% for electrical contractors. An expanded set of PPIs for inputs to construction, excluding capital investment, labor and imports, adds services to the previous PPI for construction industries, goods (formerly called inputs to construction industries). Goods constitute 60% of the index (including 7% for energy); services, 40% (trade services, 25%; transportation and warehousing services, 4%; other services, 10%). The overall PPI for inputs to construction increased 0.2% from June to July, as the index for services jumped 0.8% for the month, outweighing a drop of 0.1% in the index for goods less food and energy and 0.4% for the energy PPI. The PPI for all goods used in construction declined 3.0% over 12 months. Materials important to construction that had notable one- or 12-month price changes include diesel, down 2.5% for the month and 37% over 12 months; steel mill products, -1.0% and -13%, respectively; copper and brass mill shapes, -4.5% and -10%; aluminum mill shapes, -3.1% and -7.2%; lumber and plywood, 0.8% and -6.5%; flat glass, 0.9% and 5.0%; and cement, 0.2% and 7.4%.

New construction starts in July "were essentially unchanged from June's pace" at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Thursday, based on data it collected. "Nonresidential building showed slight improvement [+2%] following its lackluster June performance, while residential building [+4%] maintained the strengthening trend witnessed over the past several months. At the same time, nonbuilding construction in July continued to slide back [-9%] from the exceptional activity witnessed earlier in the year that reflected the start of very large projects, including several massive liquefied natural gas terminals. Through the first seven months of 2015, total construction starts on an unadjusted basis were...up 19% from the same period a year ago. Leaving out the volatile electric utility and gas plant category, total construction starts during the first seven months of 2015 would be up a more moderate 10%" year-to-date (YTD).

The value of nonresidential construction starts, not seasonally adjusted, decreased 12% from July 2014 to July 2015 and 1.3% YTD for the first seven months of each year, CMD (formerly Reed Construction Data) reported on Monday, based on data it collected. Nonresidential building starts declined 2.0% YTD. Institutional building starts were flat, while commercial building starts declined 3.0%, respectively. Heavy engineering starts were unchanged YTD.

Housing starts increased 10% from July 2014 to July 2015 and 11% YTD, the Census Bureau reported on Tuesday. Single-family starts increased 19% year-over-year and 11% YTD. Multifamily (buildings with 5 or more units) starts fell 2.1% year-over-year but rose 12% YTD. Building permits, a fairly reliable predictor over time of near-term starts, especially single-family, increased 7.5% year-over-year and 14% YTD overall, with single-family permits rising 6.1% and 8.8%, respectively, and multifamily up 11% and 23%. Multifamily permits YTD (265,000) far exceed starts (221,000), suggesting more projects may begin soon. Single-family permits YTD (409,000) virtually match starts (420,000).

The Architecture Billings Index (ABI) score in July "was 54.7, down a point from a mark of 55.7 in June," the American Institute of Architects (AIA) reported on Wednesday. "This score still reflects an increase in design services (any score above 50 indicates an increase in billings)." Firms with an institutional practice had the highest score (57.3), followed by mixed practice (56.8), commercial/industrial (53.4) and multifamily residential (49.8). (Scores for sub-indexes are based on three-month moving averages.)

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