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AGC's Data DIGest: January 27-30, 2015

Employment rises in 40 states in December; materials cost reports are mixed

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 40 states and the District of Columbia from December 2013 to December 2014 and decreased in 10 states, an AGC analysis of Bureau of Labor Statistics (BLS) data released on Tuesday showed. Texas again added the most jobs (47,500 jobs, 7.7%), followed by Florida (34,300, 8.9%) and California (26,000, 4.0%). The largest percentage gains again occurred in North Dakota (26%, 8,300 jobs) and Utah (13%, 10,100), followed by Wisconsin (12.7%, 12,400) and Arkansas (12.6%, 5,800). The largest percentage losses again occurred in West Virginia (-9.1%, -3,000 jobs) and Mississippi (-7.5%, -4,000), followed by Hawaii (-4.5%, -1,400 jobs) and Arizona (-3.4%, -4,300). Arizona lost the most jobs, followed by Mississippi and West Virginia. For the month, 38 states and D.C. added construction jobs, 10 states lost jobs, and Indiana and New Mexico had no change. In much of the country, gains may have been aided by weather that was unseasonably mild in December 2014 and unusually severe in November and in December 2013. Only North Dakota, Oklahoma and Louisiana have topped pre-recession construction employment peaks. (BLS combines mining and logging with construction in D.C., Hawaii and five other states to avoid disclosing data for industries with few firms.)

Construction materials prices have moved in divergent directions. "Although the price for scrap steel moved up for the second consecutive month by $9/ton the first week in January on the Chicago Metal Exchange, Nucor announced on [January 12] a price reduction of [$25/ton] for rebar effective immediately," New South News reported on January 26. "As there is also a substantial amount of imported rebar 'on the water' which will be available in some southeastern ports in February, most analysts expect domestic rebar mills to hold the January price through February....As a result of lower resin costs and lower demand, which is typical in winter months, polyethylene sheeting manufacturers reduced prices by approximately 3% the second week in January. The price reduction should hold through February as resin manufacturers are not expected to try to increase prices until at least March. Southern yellow pine dimensional lumber and plywood prices moved up again in late December and now are approximately 4 to 5% higher than in November. Lumber prices have been basically flat in January. Lead times are around the normal of approximately one week for mill direct truckloads, so unless there is a spike in demand, prices should remain at or about their current levels into early February. There was no change in pricing by masonry reinforcing and anchor manufacturers in January and manufacturers will hold prices at current levels through February. Manufacturers have indicated they may increase prices in March between 5 to 7%....[Most construction chemical and concrete repair manufacturers] are increasing prices in early February." Regarding a survey of aggregates, cement and concrete suppliers that it released on January 26, Thompson Research Group reported, "We are hearing of price increases of anywhere from 3% to 7%" for aggregates. "A handful of key [cement suppliers] have price increase letters out in the market, ranging from $10-$20 for spring 2015. [For concrete,] the downstream pricing environment remains spotty." In a survey released on Wednesday by IHS and based on data it compiled from procurement executives of engineering, procurement and construction firms, "Nine of the 12 individual components registered falling prices in January, led by copper-based wire and cable, carbon steel pipe and freight rates. January's plunge into negative territory was a particularly notable reversal for fabricated structural steel and alloy steel pipe—both of which had seen rising prices over all of 2014. Of the remaining subcomponents, only ready-mix concrete, turbines and pumps and compressors tallied rising prices." Diesel prices fell steeply.

Real (net of inflation) gross domestic product (GDP) increased 2.6% at a seasonally adjusted annual rate in the fourth quarter (Q4) following a 5.0% jump in the third quarter (Q3), the Bureau of Economic Analysis (BEA) reported today. Real private fixed investment in new nonresidential structures (including mines and wells) increased at a 2.6% rate in Q4, down from a 4.8% rate in Q3, while real investment in new residential structures rose at a 3.2% rate in Q4, down from 4.1% in Q3. Among nonresidential categories, real investment in commercial and health care structures increased at a 2.2% rate in Q4 after rising at an 11% rate in Q3; manufacturing structures, 11% and 27%, respectively; power and communication structures, -14% and -11.5%; and other nonresidential structures ("primarily...religious, educational, vocational, lodging, railroads, farm, and amusement and recreational structures, net purchases of used structures, and brokers' commissions on the sale of structures"), 10.5% and -1.2%. Real investment in new multifamily structures climbed 14% and 15%, respectively; and new single-family rose at a 14% rate after falling at a 3.0% pace. Real government gross investment in structures rose at a 2.2% rate in Q4 and 1.2% in Q3. The price index for real private investment in new nonresidential structures rose at a 0.9% rate in Q4 and 2.4% in Q3; new residential structures, 4.1% and 7.4%; and government structures, 1.1% and 2.5%.

The employment cost index, a weighted average of all wages and salaries, benefits, and required employer payments such as unemployment and worker's compensation, rose 0.6% in the fourth quarter, seasonally adjusted, for all private-sector employees and 0.7% for construction industry employees, BLS reported today. From December 2013 to December 2014, compensation rose 2.3% for all private industry and 1.8% for construction. However, the figures for construction may understate the increases in both residential and nonresidential segments because employment grew more in the lower-paid residential portion (6.0% from December 2013 to December 2014) than the higher-paid nonresidential segment (4.3%).

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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