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Construction employment in November, spending in October climb briskly
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Nonfarm payroll employment increased by 211,000 in November, seasonally adjusted, and by 2,637,000 (1.9%) year-over-year (y/y), while the unemployment rate held steady at a 7-1/2 year low of 5.0%, the Bureau of Labor Statistics (BLS) reported Friday. Construction employment rose by 46,000 for the month (to 6,490,000) and by 259,000 (4.2%) over 12 months. The employment level was the highest since January 2009. The number of unemployed jobseekers who last worked in construction decreased from 629,000 in November 2014 to 536,000 in November 2015, the lowest November total since 2000. The unemployment rate for such workers fell from 7.5% a year earlier to 6.2%, the lowest November rate since 2007. (Industry unemployment data are not seasonally adjusted and should only be compared y/y, not across months.) Average hourly earnings—a measure of wages and salaries—in construction increased by 2.7% over 12 months, the largest November-to-November rise since 2008. The pickup in wages is consistent with the decline in overall and construction unemployment and the results of a survey AGC released on September 10 in which 86% of contractors reported difficulty finding qualified hourly craft or salaried professional workers.
Construction spending in October totaled $1.107 trillion at a seasonally adjusted annual rate, 1.0% above the September rate, 13% higher than a year before, and the highest level since December 2007, the Census Bureau reported on Tuesday. There was widespread y/y growth. Private nonresidential spending increased 0.6% for the month and 15% y/y; private residential 1.0% and 17%, respectively; and public construction, 1.4% and 6.1%. Among private nonresidential segments, in descending order of October size, manufacturing construction leaped 3.0% and 41%, respectively; power, -1.4% and 7.5% (comprising a 34% yearly jump in oil and gas pipelines and field structures offsetting a 5% drop in electric power facilities); commercial (retail, warehouse and farm), -1.1% and -3.7%; and office, 0.3% and 17%. New multifamily construction jumped 1.4% and 28%; new single-family, 1.6% and 11%; and residential improvements, -0.3% and 23%. Of the two largest public segments, highway and street construction gained 1.1% and 6.0%, while educational was flat for the month but rose 8.4% y/y.
Construction employment, not seasonally adjusted, increased from October 2014 to October 2015 in 180 (50%) of the 358 metro areas (including divisions of larger metros) for which the BLS provides construction employment data, decreased in 132 (37%) and was stagnant in 46, according to an AGC release and map on Thursday that analyzed BLS data. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) In 33 metros, construction employment set or tied the highest October level since records began in 1990. Riverside-San Bernardino-Ontario, Calif. added the most jobs during the past year (9,800 construction jobs, 13%), followed by the Los Angeles-Long Beach-Glendale, Calif. division (9,400 construction jobs, 8%), Denver-Aurora-Lakewood, Colo. (9,400 combined jobs, 10%), and Las Vegas-Henderson-Paradise, Nev. (8,400 construction jobs, 19%). Weirton-Steubenville, W.Va.-Ohio again had the largest percentage gain (56%, 900 combined jobs), followed by Wenatchee, Wash. (21%, 500 combined jobs); Buffalo-Cheektowaga-Niagara Falls, N.Y. (19%, 4,400 combined jobs) and Las Vegas-Henderson-Paradise. The largest job losses again were in the Fort Worth-Arlington, Texas division (-6,000 combined jobs, -8%), followed by Bergen-Hudson-Passaic, N.J. (-2,200 combined jobs, -7%); Miami-Miami Beach-Kendall, Fla. (-2,100 construction jobs, -5%), and Minneapolis-St. Paul-Bloomington, Minn.-Wisc. (-1,700 combined jobs, -2%). The largest percentage declines were in Watertown-Fort Drum, N.Y. (-19%, -400 combined jobs), Gulfport-Biloxi-Pascagoula, Miss. (-17%, -1,500 combined jobs), Bloomington, Ind. (-15%, -400 combined jobs), Elizabethtown-Fort Knox, Ky. (-15%, -300 combined jobs) and Terre Haute, Ind. (-15%, -700 combined jobs).
Reports from the 12 Federal Reserve districts "indicate that economic activity increased at a modest pace in most regions of the country" from early October through mid-November, the Fed reported on Wednesday in its latest "Beige Book," a compilation of informal soundings of business conditions in each district (which is referenced by the name of its headquarters city). "Residential construction grew at a modest to moderate pace since the previous report. The New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis and Kansas City districts reported growth in residential construction, while construction in Dallas and Minneapolis was flat. Commercial construction strengthened modestly in most districts. However, the Minneapolis district saw continued strong growth, particularly in cities where commercial permitting increased. In contrast, New York reported little change....Employers in several districts reported difficulty finding skilled craftsmen and general laborers in the construction industry....The Dallas and San Francisco districts noted that labor shortages may have constrained building activity in some areas....Most districts said that wage pressures increased only for skilled occupations and for workers that were in short supply."
The National Association of Home Builders reported in its "Eye on Housing" blog on Wednesday, "Based on the most recent 2014 [Bureau of Economic Analysis data] and NAHB estimates, construction made up 3.77% of economic output in 2014....the state with the highest construction share of gross state product was North Dakota, where construction contributed 5.87% of gross state product. Louisiana ranked as the second highest (5.61%), followed by Hawaii (5.50%), Montana (5.37%), and Utah (5.17%)." The smallest shares were in the District of Columbia (1.17%), Delaware (2.86%) and Connecticut (3.03%).
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