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AGC's Data DIGest: December 13-19, 2014

Most states add jobs but remain below peak; Dodge reports surge in starts

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.

Seasonally adjusted construction employment increased in 38 states and the District of Columbia from November 2013 to November 2014 and decreased in 12 states, an AGC analysis of Bureau of Labor Statistics (BLS) data released last Friday showed. Texas added the most jobs (47,300 jobs, 7.7%), followed by California (40,800, 6.3%) and Florida (34,900, 9.1%). The largest percentage gains were in North Dakota (16%, 5,300 jobs), Utah (10%, 7,600) and Florida. The largest percentage losses occurred in West Virginia (-11%, -3,800 jobs), Mississippi (-7.9%, -4,200), New Jersey (-4.5%, -6,200), and Nebraska (-4.1%, -1,900). New Jersey lost the most jobs, followed by Arizona (-4,600, -3.7%), Mississippi and West Virginia. For the month, 26 states and D.C. added construction jobs, 22 states lost jobs, and Idaho and Missouri had no change. Only North Dakota, Oklahoma and Louisiana have topped pre-recession construction employment peaks. (BLS combines mining and logging with construction in D.C., Nebraska and five other states to avoid disclosing data for industries with few firms.)

The value of new construction starts soared 13% at a seasonally adjusted annual rate in November, Dodge Data & Analytics (formerly McGraw Hill Construction) reported last Thursday, based on data it collected. "Nonresidential building had a particularly strong month [up 32% from October], lifted by the start of several unusually large projects, including two massive manufacturing plants and an airport terminal redevelopment. The nonbuilding construction sector also contributed to the latest month's surge [jumping 22%], boosted by a liquefied natural gas facility. Meanwhile, residential building retreated [6%] in November, as multifamily housing settled back from its brisk pace in October. For the first eleven months of 2014, new construction starts on an unadjusted basis were...up 7% from the same period a year ago [with nonresidential building up 17%, nonbuilding construction down 4% and residential up 7%]. Manufacturing plant construction surged 82% year-to-date, pushed upward by the large projects in November as well as numerous energy-related projects that were entered earlier in 2014. The commercial building group increased 13% year-to-date, featuring gains for hotels, up 28%; office buildings, up 24%; and warehouses, up 15%; while store construction lagged behind with a 1% decline. The institutional building group grew 6% year-to-date, lifted by an 11% increase for educational facilities, which is the largest nonresidential building category by dollar volume. Other gains were reported for amusement-related facilities, up 10%; transportation terminals, up 8%, and public buildings, up 2%. Declines were reported for healthcare facilities, down 3%; and churches, down 12%....The public works group was down 6% year-to-date, as highway and bridge construction retreated 13% from a very strong amount in 2013 that included several substantial bridge projects, such as the $3.1 billion Tappan Zee Bridge replacement. Declines were also registered by river/harbor development, down 6%; and water supply systems, down 7%. Year-to-date increases were reported for sewer construction, up 9%; and miscellaneous public works (supported by increased rail mass transit work), up 6%. The electric utility and gas plant category registered a 4% year-to-date gain." Single-family housing was up only 2% year-to-date, while multifamily starts climbed 25%.

Housing starts declined 1.6% at a seasonally adjusted annual rate in November from October and 7.0% from November 2013, the Census Bureau reported last Wednesday. Single-family starts slumped 5.4% and 4.6%, respectively. The often-volatile multifamily (buildings with 5 or more units) starts increased 7.6% for the month but dropped 12% year-over-year. Building permits fell 5.2% and 11%, respectively, as single-family permits dipped 1.2% and 0.9%, while multifamily permits plunged 11% for the month but inched up 0.5% year-over-year. For the first 11 months of 2014 combined, total starts rose 8.2% and permits increased 5.5%, with single-family starts and permits up 4.4% and 1.0%, respectively, and multifamily starts and permits jumping 17% and 14%.

The Architecture Billings Index, which measures whether architecture firms' billings rose or fell from the prior month (any score over 50 denotes more firms reported growth than reported decline) dipped to a level of 50.9 in November from 53.7 in October, the American Institute of Architects (AIA) reported last Wednesday. All four practice segments were above 50 (based on three-month moving averages): multifamily residential, 56.8; mixed practice, 52.6; institutional, 51.3; and commercial/industrial, 50.6.

Simulations of state and local government finances by the Government Accountability Office "suggest that the sector could continue to face a gap between revenue and spending during the next 50 years," the agency reported last Thursday. "From the second quarter of 2013 to the second quarter of 2014, total tax receipts declined 1% and income tax receipts declined 8% in real dollars. In the long term, as a percentage of gross domestic product (GDP), our model suggests that at current rates total tax revenues for the sector would not return to the 2007 historical high until 2058[. The] declining fiscal conditions indicated by our simulations continue to suggest that the sector would need to make substantial policy changes to avoid fiscal imbalances that would likely grow in the future....We calculated that closing the fiscal gap would require action to be taken today and maintained for each year equivalent to an 18% reduction in the state and local government sector's current expenditures. Closing the fiscal gap through revenue increases would require action of similar magnitude through increases in state and local tax revenues." These simulations imply that state and local construction budgets will remain tight.

This will be the last DataDIGest of 2014.

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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