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AGC's Data DIGest: January 19-27, 2016

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Dodge starts, ABI rebound in December; housing starts slip; property tax receipts rise

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 new construction starts in December increased 4% from November's level at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Thursday, based on data it collected. "December showed moderate increases for each of the three main construction sectors—nonresidential building [3%], residential building [6%], and nonbuilding construction (public works and electric utilities) [3%]. For 2015 as a whole, total construction starts climbed 8%," with nonresidential building down 8%, residential building up 14% and nonbuilding construction up 23%. "'A strong first half of 2015 was followed by a 20% loss of momentum in the third quarter and then a slight 1% rebound in the fourth quarter, as the expansion began to show that it was getting back on track,'" said Chief Economist Robert Murray. The "'fourth quarter of 2015 showed the commercial and institutional segments of nonresidential building beginning to pick up the pace once again, and supportive market fundamentals (occupancies and rents) should help renewed growth for these segments going into 2016. The public works portion of nonbuilding construction also began to pick up the pace towards the end of 2015, and should be aided by the December passage of fiscal 2016 federal appropriations as well as the new $305 billion five-year federal transportation act (the Fixing America's Surface Transportation Act).'"

The Architecture Billings Index (ABI) December score recovered to 50.9 from 49.3 in November (any score over 50 indicates billings growth), the American Institute of Architects reported on January 20. The index measures the percentage of surveyed architecture firms that reported higher billings than a month earlier less the percentage reporting lower billings. "As has been the case for the past several years, there continues to be a mix of business conditions that architecture firms are experiencing," said Chief Economist Kermit Baker. "Overall, however, ABI scores for 2015 averaged just below the strong showing in 2014, which points to another healthy year for construction this year." Based on three-month moving averages, firms with different practice specialties showed divergent trends: multifamily residential, 52.9, down from 53.8 in November; institutional, 52.2, up from 52.0; commercial/industrial, 47.3, down from 51.0; and mixed practice, 46.5, down from 47.6.

Housing starts slipped 2.5% from December 2014 to December 2015 but increased 11% for the full year, the Census Bureau reported on Wednesday. Single-family starts declined 3.3% December-to-December but rose 10% for the year as a whole. Multifamily (buildings with 5 or more units) starts decreased 3.4% December-to-December but rose 12% for the year. Building permits, a fairly reliable predictor over time of near-term starts, especially single-family, decreased 3.9% December-to-December but rose 12% for the year overall, with single-family permits rising 1.8% and 7.9%, respectively, and multifamily down 13% December-to-December and up 19% for the year. Multifamily permits for the year (413,000) far exceed starts (360,000), suggesting more projects may begin soon. Single-family permits (639,000) trail starts (663,000).

The National Association of Home Builders reported on Friday that its "tabulations of the Census Bureau's quarterly tax data show that $527 billion in taxes were paid by property owners from the fourth quarter of 2014 through the end of third quarter of 2015. This represents a $37 billion increase over the previous trailing four-quarters, or a nearly 7.5% gain, the largest growth since 2010." Property tax receipts are a primary source of funding for public school and other municipal construction. An AGC analysis of Census data on construction spending shows public elementary and secondary school construction spending has increased on a year-over-year basis for the past six months after several years of declining or fluctuating spending. The November 2015 total was the highest seasonally adjusted annual rate since July 2012.

"The number of apartment buildings with four or more stories is taking an increasingly larger share of the total completed in the national apartment market," apartment data-tracking firm Axiometrics Inc. reported on January 12, based on its analysis of Census's annual Survey of Construction. "The share increased from 10% in 2012 to 13% the next year and finished 2014 at 15%. The share of buildings with 20 or more units also is increasing. Those properties averaged about 21% from 1999-2007 before climbing to 31% in 2008 and rising steadily to reach 47% by 2014....Buildings with 50 or more units, which represented only 2% of the market in 1999, comprised 11% of the market in 2014. Garden apartment projects, which typically average less than 20 units per building and once represented almost half of all rental buildings constructed, now comprise less than one-third of apartment construction."

Nearly half (49%) of the 148 respondents to the latest quarterly Business Conditions Survey of the National Association for Business Economics reported their firms had increased wages and salaries in the fourth quarter of 2015—the highest share to do so in more than a decade, the association reported on Monday. Only 20% of respondents reported their firms had increased spending on structures in the past quarter, vs. 15% who reported a decrease, for the lowest net reading (4%) since 2014. Similarly, the net percentage expecting an increase in the next three months was only 3%, also the lowest since 2014.

"In 2014, women who worked full time in wage and salary jobs had median usual weekly earnings of $719, which was 83% of men's median weekly earnings ($871)," the Bureau of Labor Statistics reported on January 15. "Women's earnings as a percentage of men's varied by occupation. Women's median usual weekly earnings in construction and extraction occupations ($691) were 91% of the earnings of their male counterparts," the highest percentage of men's earnings among 22 occupations.

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