Construction spending slips in November; two-thirds of metros add jobs in year
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Construction spending in November totaled $975 billion at a seasonally adjusted annual rate, down 0.3% from the upwardly revised rate in October and up 2.4% from November 2013, the Census Bureau reported on Monday. Private residential spending rose 0.9% for the month but slipped 0.5% over the latest 12 months; private nonresidential spending dipped 0.3% month-over-month but grew 4.7% year-over- year; and public construction spending fell 1.7% and rose 3.2%, respectively. Of the three residential components, new single-family construction climbed 1.0% in November and 13% year-over-year; new multifamily, 1.1% and 27%, respectively; and improvements to existing residential structures, 0.7% and -25%. The largest private nonresidential segment was power construction (including conventional and renewable power plus oil and gas fields and pipelines), which climbed 2.4% for the month but slid 3.7% year-over-year. The category was probably affected by fluctuations in wind-power construction caused by changes in the wind production tax credit. The next largest private segments (in descending order of current size) were manufacturing, which increased 0.1% and 21%, respectively; commercial (new and renovated retail, warehouse and farm), -1.8% and 8.9%; and office, -2.1% and 18%. Of the top two public segments, highway and street construction rose 0.3% for the month and 5.5% over 12 months, while public educational spending fell 2.5% and increased 2.3%, respectively. For the first 11 months of 2014 combined, total spending increased 5.7% from the same period in 2013, with private residential up 4.9%, private nonresidential up 11%, and public up 1.1%.
Construction employment, not seasonally adjusted, increased from November 2013 to November 2014 in 224 of the 339 metro areas (including divisions of larger metros) for which BLS provides construction employment data, decreased in 64 and was stagnant in 51, according to an AGC analysis of BLS data released on Tuesday. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) Houston-Sugar Land-Baytown again added the most jobs in the past year (16,200 construction jobs, 9%), followed by the Dallas-Plano-Irving division (11,000 combined jobs, 10%) and the Chicago-Joliet-Naperville division (9,100 construction jobs, 7%). The largest percentage gain again occurred in Pascagoula, Miss. (24%, 1,500 combined jobs), followed by Fargo, N.D. (19%, 1,600 combined jobs); Crestview-Fort Walton Beach-Destin, Fla. (18%, 700 combined jobs) and York-Hanover, Pa. (18%, 1,700 combined jobs). The largest job losses again were in the Bethesda-Rockville-Frederick, Md. metro division (-3,600 combined jobs, -11%), followed by Phoenix-Mesa-Glendale (-3,000 construction jobs, -3%) and the Edison-New Brunswick, N.J. division (-2,700 combined jobs, -6%). The largest percentage decline for the past year again was in Steubenville-Weirton, Ohio-W.Va. (-39%, -900 combined jobs), followed by Cheyenne, Wyo. (-17%, -600 combined jobs) and Fond du Lac, Wis. (-15%, -400 combined jobs).
Census released state population estimates for July 1, 2014, along with slight revisions for prior years, on December 23. U.S. population totaled 318.9 million, an increase of 2.4 million (0.75%) from July 1, 2013 and similar to the increases in the previous three years. North Dakota was the fastest-growing state (2.2%, down from 3.2% in 2013) for the third-straight year, followed Nevada (1.7%, vs. 1.3%, 7th-fastest in 2013), Texas (1.7%, vs. 1.6%, 4th in 2013), Colorado (1.6%, vs. 1.5%, 5th in 2013) and the District of Columbia (1.5%, vs. 2.2%, second in 2013). The growth rate accelerated the most in Nevada, followed by Oregon (from 0.8% in 2013 to 1.1% in 2014). As in the prior three years, Texas had the largest increase (451,000), followed by California (371,000) and Florida (293,000). Florida added 48,000 more residents than it had in 2013; Texas added 40,000 more than in 2013; and Georgia added 27,000 more. Population dipped in six states (up from just West Virginia's 0.1% decline in 2013): West Virginia (-0.2%, -3,269 residents), Illinois (-0.1%, -9,972), Connecticut (-0.1%, -2,664), Alaska (-0.1%, -527), New Mexico (-0.1%, -1,323), and Vermont (-0.05%, -312). New York had the biggest slowdown in population growth, 38,000 fewer additional residents than in 2013. Population growth rates and changes in them over time can significantly affect demand for various types of construction as well as state and local revenues to fund projects.
Several private indicators of construction costs showed differing patterns for the third quarter. Consultancy Rider Levett Bucknall (RLB) reported on December 12 that its National Construction Cost Index rose 1.7% from July to October 2014 (and 5.2% from October 2013 to October 2014, up from 1.4% (and 4.3%) in the period ending in July 2014. Among the 12 cities for which RLB computes indexes, third-quarter costs rose fastest in Honolulu (2.8%), San Francisco (2.3%), Portland, Ore. and Los Angeles (2.2% each), and slowest in Las Vegas (0.9%), Denver and Phoenix (1.0% each). Construction data provider RS Means reported that its 30-city average Means Construction Cost Index increased 0.3% from July 1 to October 1, with materials rising 0.5% and installation costs growing 0.1%. In the prior quarter, the increases were 0.5%, 0.1% and 1.2%. Consultancy IHS and the Procurement Executives Group reported on Monday, that their Engineering and Construction Cost Index rose for the 35th consecutive month in December. "The current materials/equipment price index registered...just a touch above flat prices. Half of the individual components registered neutral prices in December. Of the remaining subcomponents, falling freight rates offset strength in fabricated structural steel and ready mix concrete. The reading in December continues a three-month trend of easing price pressures."
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