A Sustainable Workforce Starts With You

AGC's Data DIGest: July 20-24, 2015

Most states add jobs for year but only half do in June; Dodge, AIA, RLB data look rosy

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 rose in 39 states and the District of Columbia from June 2014 to June 2015 and declined in 11 states, an AGC analysis of Bureau of Labor Statistics (BLS) data released on Tuesday showed. California again added the most construction jobs (47,000 jobs, 7.0%), followed by Florida (25,200, 6.2%), Texas (18,900, 2.9%), Washington (15,300, 9.7%) and Michigan (14,000, 9.8%). Idaho again added the highest percentage of new construction jobs (13%, 4,600), followed by Nevada (11%, 7,000), Michigan, Arkansas (9.7%, 4,400) and Washington. The steepest percentage losses again occurred in West Virginia (-13%, -4,300), followed by Rhode Island (-9.6%, -1,600), Mississippi (-7.9%, -3,900) and Ohio (-5.5%, -10,900). Ohio had the largest losses, followed by West Virginia and Mississippi. For the month, there were gains in 24 states, losses in 25, and no change in Wyoming and D.C. (BLS combines mining and logging with construction in D.C. and six states to avoid disclosing data about industries with few employers.)

New construction starts in June dropped 15% from the previous month at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Wednesday, based on data it collected. "The decline followed an especially strong May, which benefited from a $9.0 billion liquefied natural gas export terminal in Texas being entered as a May start. By major sector, nonbuilding construction in June fell sharply [-38%] as the result of a steep pullback by its electric utility and gas plant category, while nonresidential building witnessed a less severe loss of momentum [-8%]. Residential building in June was able to post a slight gain [2%], helped by the continued strength for multifamily housing. During the first six months of 2015, total construction starts on an unadjusted basis were...up 23% from the same period a year ago. [Nonbuilding starts jumped 62% year-to-date; nonresidential building, 4%; and residential building, 17%.] If the volatile electric utility and gas plant category is excluded, total construction starts during the first half of 2015 would be up a more moderate 11% from the same period a year ago."

"Paced by continued demand for projects such as new education and healthcare facilities, public safety and government buildings, the ABI [Architecture Billings Index] increased in June following fluctuations earlier this year," the American Institute of Architects (AIA) reported on Wednesday. The "June ABI score was 55.7, up substantially from a mark of 51.9 in May. This score reflects an increase in design services (any score above 50 indicates an increase in billings)." Firms with an institutional practice had the highest score (59.7), followed by mixed practice (54.7), commercial/industrial (51.6) and multifamily residential (47.0). (Scores for sub-indexes are based on three-month moving averages.)

"Over the past six months, the North American construction market has remained steady and continues to be fueled by the residential market, primarily new high-rise apartments and condominiums," consultancy Rider Levett Bucknall (RLB) reported on Wednesday, based in part on an index of construction cranes it initiated six months ago. "Of the 13 locations we track in our index, 11 of them report that residential cranes account for the highest percentage of the total number of cranes. Boston, Calgary, Chicago, Denver, Honolulu, New York, San Francisco and Toronto currently have 50%-83% of their cranes dedicated to residential developments. Mixed-use and commercial developments are also contributing to crane counts in Los Angeles, Phoenix, Portland, Seattle and Washington, D.C. [The index] tracks the number of cranes in major cities across North America. The count gives a simplified measure of the current state of the construction industry's workload in each of these locations. Each RLB office counts all fixed tower cranes utilizing three techniques: physically counting the cranes appearing on each city's skyline, surveying RLB staff, and contacting crane suppliers. Cranes are counted twice yearly."

"With the housing market in its fourth year of recovery, construction of single-family homes and multifamily rentals is rebounding," the Wall Street Journal reported on Wednesday. "Not so for condo construction....In the first quarter [of 2015], condo construction accounted for just 5.5% of all construction of multifamily housing in the U.S. That was the lowest ratio since the Commerce Department started tracking the figures in 1974, and far below the 24% average....To be sure, the condo markets have come back strong in certain cities, such as New York and Miami, thanks in large part to affluent and foreign buyers who can pay for most of their condos' price in cash. The drop off in construction has mostly taken place in the rest of the U.S. for projects targeted more at middle- and lower-income buyers." The article cites several impediments to condo construction: the Federal Housing Administration "tightened its lending standards in a series of moves from 2008 to 2012. [Both younger households and] investors have shown a preference for rentals....Another obstacle cited by developers: construction loans. Matt Allen, chief operating officer of the Related Group, a developer based in Miami, said he can get a construction loan for roughly 75% of the cost of building an apartment complex. But lenders will cover only 50%, on average, of a condo complex's cost because of the greater risk, he said."

Of the 112 corporate economists who participated in the latest Business Conditions Survey of the National Association for Business Economics that was released on Monday, "a majority of panelists expect solid growth for the remainder of 2015" at their companies and in the overall economy. But 35% report shortages of skilled labor, up from 25% in April. Of the 74 respondents who reported on their firms' capital spending on structures, 23% reported rising spending last quarter (vs. 27% in the two prior surveys) and 25% expect rising spending in the coming quarter (vs. 29% and 30% in the two prior surveys).

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.