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AGC's Data DIGest: August 18-22, 2014

39 states add jobs in July; housing starts and permits, MHC, ABI show big gains

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.

View July state employment tables by state and rank here. Please note the next Data DIGest will be sent the week of Sept.2.

Seasonally adjusted construction employment increased in 39 states from July 2013 to July 2014 and decreased in 11 states and the District of Columbia, an AGC analysis of Bureau of Labor Statistics (BLS) data released last Monday showed. The largest percentage gains were in Nevada (13%, 7,500 jobs), Delaware (13%, 2,600) and Florida (11%, 41,700). Florida again added the most jobs, followed by Texas (23,600, 3.8%) and California (22,600, 3.6%). The steepest 12-month percentage losses again occurred in New Jersey (-6.5%, -8,900), followed by West Virginia (-5.8%, -2,000), Mississippi (-5.6%, -2,900) and Arizona (-4.8%, -5,900). New Jersey also had the highest number of lost jobs, followed by Arizona, Mississippi and West Virginia. For the month, 34 states added construction jobs, 15 states and D.C. lost jobs, and Rhode Island had no change. Delaware had the largest percentage gain between June and July (5.7%, 1,200 jobs), followed by Alabama (4.9%, 3,800 jobs), Kentucky (3.4%, 2,200 jobs), New Mexico (3.1%, 1,200 jobs), and Virginia (2.6%, 4,700 jobs). Virginia added the most workers during the month, followed by Florida (4,400 jobs, 1.1%), Texas (4,000 jobs, 0.6%) and Alabama. The biggest one-month losses were in California (-6,400, -1.0%), New York (-3,500, -1.1%), Georgia (-1,500, -1.0%), Nebraska (-1,400, -3.0%) and Kansas (-1,100, -1.8%). Nebraska had the highest monthly percentage decline, followed by West Virginia (-1.8%, -600 jobs) and Kansas. (BLS combines mining and logging with construction in D.C., Delaware and five other states to avoid disclosing data for industries with few firms.)

Housing starts jumped 16% at a seasonally adjusted annual rate in July from June and 22% compared with July 2013 levels, the Census Bureau reported last Tuesday. Starts for January-July combined were 9.1% higher than in the same months of 2013. The numbers have been even more volatile than usual this year, making the year-to-date (YTD) total more indicative of trends than single-month comparisons. Single-family starts climbed 8.3% for the month and 10% year-over-year but only 3.2% YTD. Multifamily starts (buildings with 5 or more units) soared 33%, 49% and 24%, respectively. Building permits, a fairly reliable indicator over time of future starts, increased 8.1%, 7.7% and 6.1%. Single-family permits rose 0.9%, 3.9% and 0.8%, respectively. Single-family permits trailed starts for July and YTD, suggesting homebuilders may start fewer houses in the near future. Multifamily permits leaped 24% from June, 15% from July 2013 and 18% YTD. Multifamily permits exceeded starts YTD but trailed starts in July.

New construction starts in July climbed 6%” at a seasonally adjusted annual rate, while for “the first seven months of 2014, total construction starts on an unadjusted basis were reported at…a 4% gain compared to the same period a year ago,” McGraw Hill Construction (MHC) reported last Thursday, based on data it collected. “Nonresidential building continued to advance [7% from June and 13% YTD], supported by yet another robust month for manufacturing plant projects as well as improvement for commercial building. The nonbuilding construction sector (public works and electric utilities) also advanced [14% from June but down 10% YTD], helped by the start of a very large mass transit rail project. At the same time, residential building was unchanged from its pace in June [but rose 5% YTD]. ‘The construction expansion this year is getting more of a contribution from nonresidential building,” stated [chief economist and vice president Robert Murray]. ‘Manufacturing plant construction is seeing the start of numerous chemical and energy-related projects, consistent with the nation’s growing energy sector. Commercial building is maintaining its upward momentum from low levels, while institutional building with its up-and-down pattern appears to be stabilizing after a lengthy decline. With residential building being limited so far in 2014 by the sluggish single-family market, the further growth for nonresidential building has been needed to keep the construction expansion going. As for public works, this year’s pullback has stayed moderate, helped in part by the ongoing strength for mass transit work. The recent passage of a $10.8 billion “patch” by Congress to shore up the Highway Trust Fund through May 2015 should also help to keep this year’s public works downturn from getting much more severe.’”

The American Institute of Architects (AIA) reported last Wednesday that its Architecture Billings Index (ABI), which “reflects the approximate nine- to 12-month lead time between architecture billings and construction spending,” hit a seven-year high of 55.8 in July, seasonally adjusted, from 53.5 in June. “The diffusion indexes contained in the full report are derived from a monthly…survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months.” Scores above 50 indicate an aggregate increase in billings, and scores below 50 indicate a decline. Firms with a predominantly residential practice (typically, multifamily) had a score of 56.5 in July, based on a three-month average, down from 58.5 in June; commercial/industrial, 51.2, down from 51.4; institutional, 53.3, up from 51.4; and mixed practice, 61.0, up from 57.1.

“Construction projects in cities across the country that stalled during the economic downturn now are getting the green light, an indication that the real-estate recovery is spreading beyond a handful of urban areas,” the Wall Street Journal reported last Wednesday. “Now activity is spreading to Atlanta, Chicago, Las Vegas and a number of other cities that are finally seeing a pickup in employment, economists say.”

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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