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AGC's Data DIGest: February 10-13, 2015

Nonres starts, materials prices show mixed trends in January, multiple sources show

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.

The value of nonresidential construction starts jumped 11% from January 2014 to January 2015, CMD (formerly Reed Construction Data) reported on Wednesday, based on data it collected. Heavy engineering starts surged 48%, while nonresidential building starts shrank 8.3%, with commercial building starts down 10% and institutional building starts up 0.1%.

Investment research firm Thompson Research Group issued a summary of its monthly survey of building products firms on Wednesday. "With the precipitous drop in energy prices, we remain focused on how this impacts building product manufacturers' ability to pass on pricing. The one category that has taken a step back since our prior monthly survey is that of wallboard. [Steel stud pricing was] flat to up sequentially in January. [Wallboard pricing was] up sequentially, while the 15%-20% price increase saw pushback from national home builders. [Insulation pricing was] flat to up sequentially. Feedback reflects optimism towards a portion of the January 12%-18% price increase to be accepted. [Roofing and flooring pricing were] flattish sequentially. [Ceiling pricing was] generally flat sequentially. Feedback positive on the 5% ceiling price increase in February 2015." Materials prices for highway construction are mixed. Concrete prices continue to rise in many regions. A large Utah supplier informed customers on February 1 that it would raise prices $7.50 (about 8%) per cubic yard on April 1. The Illinois Department of Transportation posted its monthly price indexes on February 6. The index for bitumen (asphalt) tumbled to a three-year low of $509 per ton on February 1, the fourth consecutive monthly decline, down 10% from January 1 and down 4.1% from a year earlier. The index for steel was $50.39 per hundredweight, down 0.1% from January 1 and up 1.9% from a year before. That index has remained within 2% of the current value for two years. The fuel index stood at $1.75 per gallon, up 1.2% from January 1 but down 45% from a year ago. Readers are invited to send price-change notices to simonsonk@agc.org.

The numbers and rates per 100 employees of job openings, hires and total separations (voluntary quits, layoffs and discharges, and other separations) for total private industry and for construction increased in December 2014 from both November 2014 and December 2013, the Bureau of Labor Statistics (BLS) reported on Tuesday in its latest Job Openings and Labor Turnover Survey. In construction, seasonally adjusted hires in December totaled 393,000, the largest number since August 2008. Job openings in construction rose to a six-month high of 147,000. Quits totaled 156,000, the highest number since April 2008. These numbers may imply workers are more confident they can find another job, while employers are hiring more workers but also having more trouble filling jobs. State and local tax revenues are an important influence over time for public construction other than highways, which depend more on federal and state highway tax revenues. Local property taxes are especially relevant to school construction funding.

Foreign-born workers accounted for almost 23% of the U.S. construction labor force (including self-employed workers) in 2013, matching the highest level in the previous decade, the National Association of Home Builders (NAHB) reported on February 3, based on its analysis of 10 years of American Community Survey data from the Census Bureau. Immigrants' "share is even higher in construction trades, reaching 28%. Concentration of immigrants is particularly high in some of the trades needed to build a home, like carpenters [28%], painters [43%], drywall/ceiling tile installers [49%], brick masons [35%] and construction laborers [34%]—trades that require less formal education but consistently register some of the highest labor shortages in [NAHB surveys]....The trades with low presence of foreign-born labor, such as construction and building inspectors, boilermakers, elevator installers, electricians, first-line supervisors—tend to recruit better-educated workers. [The] most common non-construction trades in the building industry...are management, office and sales occupations. [The immigrant] share among construction and miscellaneous manager—the top two most common non-construction trades in the industry—is under 12% and 14%, respectively; 9% among chief executives, and [7%] among general and operations managers. ...Immigrants comprise close to 41% of the construction workforce in California and close to 40% in Texas," 35% in New York and 33% in Nevada...States that traditionally rely on foreign-born labor but lost its significant share during the housing downturn are most likely to experience difficulties in filling out construction job vacancies once home building takes off."

"Total state tax collections grew by 4.4% in the third quarter of 2014, following a decline in the second quarter of 2014," the Rockefeller Institute of Government reported on Thursday. "The large fluctuations in state tax collections have mostly been attributable to policy changes at the federal level...We expect that tax revenue collections will show continuous and steady growth in the coming quarters due to the disappearing impact of the federal fiscal cliff. Early figures for the fourth quarter of 2014 indicate continued and relatively strong growth in overall state tax collections as well as in major tax sources....Local tax collections from major sources have been relatively weak by historical standards over the last three years, due in part to the lagged impact of falling housing prices on property tax collections. [Growth] in the four-quarter moving average for the latest quarter was only 1.4%. The largest year-over-year growth in the last decade was 6.5%, in the second quarter of 2004....Local property tax revenues grew by 1.1% in nominal terms in the third quarter of 2014 compared to the same quarter of 2013.

The Census Bureau released U.S. totals from the 2012 Census of Construction for the final 11 out of 31 construction subsectors on January 27. A listing Friday shows that state results should be posted within the next 30 days.

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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