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Contractors are more optimistic, on balance, than in previous years about the 2018 outlook for nonresidential and multifamily construction, based on the 1,046 responses to a survey that AGC released on Wednesday. About 53% expect the available dollar volume of projects they compete for in 2018 to be higher than in 2017, while 9% expect the volume to be lower, for a net positive reading of 44% (vs. a net positive 37% in the 2017 survey). (The remaining 37% expect the volume to remain about the same.) The net reading was positive for all 13 market segments included in the survey. The net was highest for private office construction, at 22%, followed by transportation facilities and retail, warehouse and lodging construction, both at 21%; water/sewer and manufacturing, 20% each; K-12 school, 18%; hospital and highway, 17% each; multifamily and public building, 16% each; power, 13%; higher education, 11%; and federal construction, 8%. The net readings were generally a few points higher than in 2017 for most categories. The survey was conducted from November 1 to mid-December, before the final version of the Tax Cuts and Jobs Act was written. Only 3% of respondents expect their firms to reduceheadcount in 2018 (vs. 6% in the 2017 survey), compared with 75% who expect an increase (up from 73% in 2017). In addition, 78% say they are having a hard time filling key salaried or hourly craft positions (up from 73% in 2017) and 82% say it will be as hard or harder to do so in 2018 (up from 76% in 2017). Of 16 issues listed as answers to a question regarding "the biggest concerns to your firm," 41% picked worker shortages; 39% chose increased competition for projects; and 28% selected growth in federal regulations. All of these percentages were slightly higher than in 2016. The survey was sponsored by software firm Sage and included several questions about use of information technology, among other topics.
Nonfarm payroll employment in December increased by 148,000, seasonally adjusted, from November and by 2,055,000 (1.4%) year-over-year (y/y) in all of 2017, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate, 4.1%, matched the 17-year low reached in October and November. Construction employment increased by 30,000 for the month and 210,000 (3.1%) y/y to 6,993,000, the highest total since September 2008. Average hourly earnings in construction increased 3.0% y/y to $29.24, or 9.8% higher than the average for all private-sector employees ($26.63, a rise of 2.5% y/y). The unemployment rate in construction, not seasonally adjusted, fell to 5.9% (from 7.4% in December 2016), and the number of unemployed jobseekers with construction experience was 554,000 (down from 670,000). These were the lowest December figures in the 17-year history of both series. (Not-seasonally-adjusted data may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.) Architectural and engineering services employment increased 3.3% y/y, a favorable indicator for future construction demand.
Construction spending totaled $1.257 trillion at a seasonally adjusted annual rate in November, a record level before adjusting for inflation, 0.8% higher than the upwardly revised October rate, and 2.4% higher than the November 2016 rate, the Census Bureau reported on Wednesday. Year-to-date (YTD) spending for the first 11 months of 2017 combined was 4.2% higher than in January-November 2016. Public construction edged up 0.2% for the month but declined 2.8% YTD. Of the three largest public segments, highway and street construction slipped 0.8% for the month and 4.1% YTD; educational construction climbed 3.8% in November and 2.9% YTD; and transportation (transit, passenger rail, ports and airports) slid 2.1% for the month and 1.0% YTD. Private residential spending gained 1.0% in November and 12% YTD. New multifamily construction sank 1.3% for the month but rose 3.3% YTD; new single-family construction rose 1.9% and 9.0%, respectively; and residential improvements gained 0.7% and 18%. Private nonresidential spending climbed 0.9% from September and 1.1% YTD. Of the four largest components, power (electric power plus oil and gas pipelines and field structures) dipped 1.1% for the month and 3.5% YTD; commercial (retail, warehouse and farm) rose 1.5% and 15%, respectively; manufacturing tumbled 1.6% and 13%; and office rose 5.5% and 2.5%.
Construction employment, not seasonally adjusted, rose from November 2016 to November 2017 in 255 (71%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, fell in 52 (15%) and was unchanged in 51, according to an AGC analysis. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The largest gain again occurred in Riverside-San Bernardino-Ontario, Calif. (15,100 construction jobs, 16%), followed by New York City (10,900 combined jobs, 7%) and Las Vegas-Henderson-Paradise (9,600 construction jobs, 16%). The largest percentage gain again occurred in Cheyenne, Wyo. (21%, 700 combined jobs), followed by Wenatchee, Wash. (19%, 500 combined jobs); Punta Gorda, Fla. (17%, 700 combined jobs); Madera, Calif. (16%, 300 combined jobs); Riverside-San Bernardino-Ontario and Las Vegas-Henderson-Paradise. The largest job loss was in Columbia, S.C. (-3,000 combined jobs, -18%), followed by the Kansas City, Mo. division (-2,200 combined jobs, -8%) and Houston-The Woodlands-Sugar Land (-2,000 construction jobs, -1%). The largest percentage losses again occurred in Grand Forks, N.D.-Minn. (-24%, -1,100 combined jobs) and Columbia S.C., followed by Lewiston, Idaho-Wash. (-12%, -200 construction jobs). Employment set a record high for November in 43 metros (dating back in most areas to November 1990); no metros set a new November low.
The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at http://store.agc.org.
