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AGC's Data DIGest: February 3-5, 2016

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Construction employment rises, but unevenly, in January; metro job gains are spotty

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.

Nonfarm payroll employment increased by 151,000, seasonally adjusted, and by 2,665,000 (1.9%) for the year, and the unemployment rate fell to 4.9%, the Bureau of Labor Statistics (BLS) reported today. Construction employment rose by 18,000 for the month (to 6,615,000) and by 264,000 (4.2%) year-over-year (y/y). Industry employment reached the highest level since December 2008. Residential construction employment (residential building and specialty trade contractors) increased by 20,100 for the month and 149,500 (6.2%) y/y. Nonresidential employment (nonresidential building, specialty trades, and heavy and civil engineering construction) fell by 2,300 for the month and rose 2.9% y/y. The disparity may reflect the ongoing rise in residential spending and downturn in nonresidential spending in the last half of 2015 that the Census Bureau reported on Monday. The number of unemployed jobseekers who last worked in construction declined from 811,000 in January 2015 to 729,000, and the unemployment rate for such workers dropped from 9.8% to 8.5%, the lowest January figures for both series since they began in 2000. (Industry unemployment data are not seasonally adjusted and should only be compared year-over-year, not across months.) Average hourly earnings—a measure of wages and salaries—in construction increased by 2.1% y/y.

Construction employment, not seasonally adjusted, increased from December 2014 to December 2015 in 190 (53%) of the 358 metro areas (including divisions of larger metros) for which the BLS provides construction employment data, decreased in 105 (29%) and was stagnant in 63, according to an AGC release and map on Tuesday that analyzed BLS data. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) In 38 metros, construction employment set or tied the highest December level since records began in 1990. The Anaheim-Santa Ana-Irvine, Calif. division added the most jobs during the past year (10,500 construction jobs, 13%), followed by Riverside-San Bernardino-Ontario, Calif. (9,000 construction jobs, 12%), the Chicago-Naperville-Arlington Heights division (8,900 construction jobs, 8%) and the Los Angeles-Long Beach-Glendale division (8,100 construction jobs, 7%). Weirton-Steubenville, W.Va.-Ohio had the largest percentage gain (60%, 900 combined jobs), followed by Huntsville, Ala. (18%, 1,400 combined jobs); Grand Rapids-Wyoming, Mich. (16%, 3,000 combined jobs) and Saginaw, Mich. (16%, 400 combined jobs). The largest job losses were in the Fort Worth-Arlington, Texas division (-4,300 combined jobs, -6%), the Detroit-Dearborn-Livonia division (-1,800 combined jobs, -8%); the Dallas-Plano-Irving division (-1,600 combined jobs, -1%) and Minneapolis-St. Paul-Bloomington, Minn.-Wisc. (-1,600 combined jobs, -2%). The largest percentage declines were in Gulfport-Biloxi-Pascagoula, Miss. (-14%, -1,200 combined jobs), Florence-Muscle Shoals, Ala. (-14%, -500 combined jobs) and Ft. Smith, Ark. (-14%, -1,000 combined jobs).

New York City led U.S. metropolitan areas in the dollar amount of construction starts for commercial and multifamily building in 2015 with $34.9 billion, up 66% from 2014, Dodge Data & Analytics reported on Thursday, based on data it collected. Following the New York area in dollar value of starts in 2015 were Miami, $6.3 billion, down 8% from 2014; Dallas-Ft. Worth, $6.0 billion, up 35%; Chicago, $5.9 billion, up 14%; and Washington DC, $5.9 billion, down 4%. Nationwide, the value of commercial and multifamily building in 2015 was $163 billion, up 8%. The value of commercial building starts held steady while multifamily starts increased 18%. Chief Economist Robert Murray commented in a press release, "The recovery for commercial building has so far been hesitant, with periods of increased activity often followed by a pause. On the plus side, factors such as generally rising employment and declining vacancy rates should encourage further growth for offices, hotels and warehouses, while store construction remains more problematic given the shifting retail landscape. In comparison to commercial building, the upward progression by multifamily housing has been steadier, with 2015 marking the sixth straight year of double-digit growth, helped in particular by yet another substantial increase reported for the New York" metro area.

Wages and benefits settlements in construction union bargaining agreements reached in 2015 averaged 2.5% for the first year, and 2.7% each for the second and third years, the Construction Labor Research Council (CLRC) reported, based on its analysis of 416 agreements. The first-year percentage has accelerated slightly each year since bottoming out at 1.7% in 2010 and 2011 but remains barely half of the 4.6% average in 2008. As in 2014, the most common first-year increase in 2015 was 2.6-3.0%. Among 13 crafts with at least 10 local agreements each, average first-year increases ranged from 2.1% (bricklayers) to 3.0% (plasterers). The average first-year increase was greater than in 2014 for eight crafts but smaller for five crafts.

Private-sector union membership rose from 7,359,000 (6.6% of all employees) in 2014 to 7,554,000 (6.7%) in 2015, BLS reported on January 28. Union membership among construction industry employees fell from 968,000 (13.9%) in 2014 to 940,000 (13.2%) in 2015. The number of workers in construction represented by unions (including workers covered by a bargaining agreement but not paying dues) similarly declined from 1,023,000 (14.7%) to 992,000 (14.0%). Median weekly earnings for all employees in construction amounted to $784, 1.0% above the private-sector median and 1.1% above the 2014 construction median. The small rise reflects a changing mix toward less-experienced workers, nonunion workers, lower-wage regions and perhaps lower-wage occupations. Despite the 2-3% rise in first-year settlement amounts for all crafts reported by CLRC, median earnings for construction union members dipped 2.1% to $1,099, reflecting the changing mix in experience, location and craft. Median earnings for nonunion construction workers rose 2.6% to $743.

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.