Employment edges up, unemployment shrinks in July; spending accelerates in June
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Nonfarm payroll employment increased by 215,000 in July, seasonally adjusted, and by 2,915,000 (2.1%) over 12 months, the Bureau of Labor Statistics (BLS) reported Friday. Construction employment rose by 6,000 for the month (to 6,383,000) and by 36,000 (7,200 per month) over the past five months, far below the monthly average gain of 19,250 from July 2014 to July 2015. The number of unemployed jobseekers who last worked in construction fell from 666,000 in July 2014 to 474,000 in July 2015, the lowest July total since 2001. The unemployment rate for such workers fell from 7.5% to 5.5%, the lowest July rate since 2005. (Industry unemployment data are not seasonally adjusted and should only be compared year-over-year, not across months.) Architectural and engineering services employment increased by 3.6% over 12 months, suggesting continued strong demand for professionals to design future construction projects. The sluggish growth in construction employment and decline in the pool of experienced jobseekers, despite acceleration in current spending (see below) and steady growth in design work, suggest contractors are experiencing greater difficulty finding qualified new hires.
Construction spending in June totaled $1.065 trillion at a seasonally adjusted annual rate, the highest rate since July 2008, the Census Bureau reported Friday. The level was up 0.1% from the rate in May (which was revised up by a steep 2.7% or $28 billion) and up 12% from June 2014. That was the fastest year-over-year growth rate since 2006. Private nonresidential spending skidded 1.3% for the month but climbed 15% year-over-year, private residential spending rose 0.4% and 13%, respectively, and public construction spending gained 1.6% and 8.0%. The residential total comprises year-over-year increases of 24% for multifamily, 13% for single-family and 8.2% for improvements. The largest private nonresidential segment, manufacturing construction, soared 62%, led by a doubling of spending for chemical plants and tripling for transportation equipment plants. Next came power construction (conventional and renewable power plus oil and gas fields and pipelines), down 16% year-over-year, followed by commercial (new and renovated retail, warehouse and farm), up 7.4%; and office, up 27%. The two top public segments also had year-over-year gains: highway and street construction, 14%; and public educational spending, 3.6%. Census also issued annual totals by state for total private nonresidential construction (excluding power, communication and railroad construction) and by four regions for detailed private nonresidential categories.
The Dodge Momentum Index increased 5.4% from June to July, Dodge Data & Analytics reported Friday, based on data it compiled. The index is "a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The economic doldrums of the first half of 2015 were accompanied by a sawtooth pattern for the index, and July's increase returns the index to its generally rising trend over the past four years. Improving real estate market fundamentals in the commercial sector and increased bond-related funding for institutional projects should continue to exert a positive influence over the index through the remainder of 2015. The increase...was led by strong gains for both institutional planning, up 6.0%, and commercial planning, up 4.9%."
Wage and fringe benefit increases in new construction union contracts signed in the first half of 2015 accelerated for the fourth consecutive year, the Construction Labor Research Council reported in July, based on data it compiled. Increases averaged 2.5% for the first year of new contracts, up from 2.3% for first-year increases in all of 2014 and a low of 1.7% in 2010 and 2011. For the 10 crafts that had ratified at least three new local contracts apiece in 2015, first-year increases were similar, ranging from 2.4% for boilermakers to 3.0% for carpenters and electricians.
Census sought comments on a request it received "to show how the expenditures for a particular month and construction sector break down based on the current life/phase of the project. For example, in June we showed that there was $3,995 million spent on Private Office construction. These new data would further break down this estimate" (in millions) into: Projects with 0-19% completed: $330; 20-39% completed: $924; 40-59% completed: $853; 60-79% completed: $731; over 80% completed: $1,157. "We know that many will say 'Any additional information that shows what is happening would be useful' but want to know if this [is worth what will take some effort] to create the data series. When data are sliced smaller and smaller, we run into the problem with reliability of the estimates. CVs [coefficients of variation] go up and the response rates for some sectors are getting smaller and smaller. We could not show this detail for all categories (for example Private Power, Telecommunication, or Water Supply) and the request was to combine State and Local and Federal into a single ownership: Public. Would others rather have them separated or would the State and Local be the only ownership required of the two? Also is there anyone else you would recommend I converse with on this? I do not wish to raise too many people's hopes up if this does not happen....We have not committed to tabulating and providing this information. Having staff work on this may remove them from working on other data products and estimate improvements." Send comments to firstname.lastname@example.org for forwarding.
Census posted a notice in the Federal Register on Tuesday announcing that it was preparing for the 2017 Economic Census, including a Census of Construction, and inviting comments on the survey forms used in the 2012 Economic Census. The agency "is particularly interested in comments on the usefulness of existing inquiries for continued inclusion and in suggestions for new measures that would be appropriate to include in the Economic Census."
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