A Sustainable Workforce Starts With You

AGC's Data DIGest: July 20-24, 2017

State employment growth holds steady; total starts, housing rise in June, say Dodge, Census

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 41 states from June 2016 to June 2017, decreased in eight states and the District of Columbia, and remained unchanged in Iowa, an AGC analysis of BLS data released on Friday showed. The largest percentage gains again occurred in Rhode Island (13%, 2,400 jobs), Nevada (13%, 9,500), Oregon (12%, 11,200), New Hampshire (11%, 2,800) and Louisiana (11%, 15,600). The most jobs added were again in California (46,500, 6.0%), Florida (32,400, 6.9%) and Louisiana, followed by Texas (14,400, 2.1%), Oregon and Washington (10,400, 5.6%). The steepest percentage losses again occurred in D.C. (-5.7%, -900 jobs) and Alaska (-4.9%, -800), followed by South Dakota (-900, -3.7%), Mississippi (-3.2%, -1,400 jobs) and Missouri (-2.6%, -3,100). The largest number of job losses again occurred in Missouri, Illinois (-1,700, -0.8%) and Mississippi. For the month, employment rose in 25 states and D.C., fell in 21 states and was flat in Arkansas, Maine, New Mexico and North Dakota. Employment set a record in Louisiana. (AGC's rankings are based on seasonally adjusted data, which in D.C. and six states is available only for construction, mining and logging combined.)

The value of new construction starts rose 4% from May to June at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Wednesday. "Nonresidential building increased 13% in June, strengthening after two months of lackluster activity, and the nonbuilding construction sector rose 8% with the help of elevated activity for electric utilities. However, residential building slipped 4% in June, as both sides of the housing market (single family and multifamily) retreated. Through the first six months of 2017, total construction starts on an unadjusted basis were...down 4% from the same period a year ago. If the manufacturing plant and electric/utility gas plant categories are excluded, total construction starts during the first half of 2017 would be up 1% from last year." Nonresidential building starts increased 6% year-to-date (YTD) through June, residential building was flat and nonbuilding construction slumped 22% (-6% excluding manufacturing and utility plants.)

Housing starts in June increased 8.3% at a seasonally adjusted annual rate from the May rate and 3.9% YTD through June, the Census Bureau reported on Wednesday. Single-family starts rose 6.3% for the month and 7.9% YTD. Multifamily (buildings with 5 or more units) starts jumped 15% after declining for five months in a row but remained down 4.2% YTD. Building permits, a fairly reliable predictor over time of near-term starts, climbed 7.4% for the month and 6.0% YTD. Single-family permits soared 11% YTD. Multifamily permits decreased 2.9% YTD.

Construction union local contracts signed in the first half of 2017 included an average wage and benefit increase of 2.7%, compared to an average of 2.6% in all of 2016, the Construction Labor Research Council reported. In "percentage terms, the average increase for settlements has grown by exactly 1% since 2010" when it was 1.7%. The average second-year increase so far in 2017 was 3.0%, up from 2.8% in 2016. The third-year increase in 2017 averaged 2.7%, down from 2.9% in 2016.

The Architecture Billings Index recorded the fifth consecutive month of growth in June with a score of 54.2, up from 53.0 in May, the American Institute of Architects (AIA) reported on Wednesday. The index measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings, and any score over 50 indicates billings growth. AIA says the index "reflects the approximate 9-to-12 month lead time between architecture billings and construction spending." The scores for the four practice specialties were all above 50 (based on three-month moving averages): residential (mainly multifamily), 57.1, up from 53.1 in May; mixed practice, 53.8, up from 53.6; institutional, 52.6, up from 52.4; and commercial/industrial, 52.1, up from 51.8.

"Commercial/industrial construction spending has increased just under 7% through the first five months of the year relative to the same period in 2016, as compared to over 10% growth for 2016 overall," AIA Chief Economist Kermit Baker wrote in the mid-year summary of seven construction spending forecasts, released on Tuesday. "While some slowdown was anticipated for 2017, it was expected to be offset by acceleration in the institutional sector. However, year-to-date growth in spending for institutional buildings is at only 3%, up from the 1.6% of 2016 but well below expectations when the year began. As a result, the AIA Consensus Construction Forecast panel is predicting slower growth for the construction industry for the remainder of 2017 and through 2018. Overall spending for nonresidential buildings in 2017 is projected at just under 4%, compared to the 5.6% forecast at the end of 2016. The commercial market is expected to perform largely as anticipated, with growth now forecast at 8.8% for the year, up from a projection of 8.3% entering 2017. However, both the industrial and institutional sectors have been marked down considerably. Industrial construction is currently projected to decline almost 7%, compared to a projected modest increase six months ago. Institutional construction now is seen as increasing 3.5%, compared to the 5.7% figure entering 2017....The slower estimated growth for 2017 is expected to continue through 2018. Overall spending growth is currently projected by the Consensus Forecast panel at 3.6% for next year, down modestly from the 4.9% forecast entering this year. Commercial construction is expected to perform closest to prior expectations, with the 4.0% expected growth in spending for 2018 down less than 0.5 percentage points from the late-2016 forecast. Industrial construction is now likely to see very modest 1.1% growth next year, down from the prior expectations of 3.3%, while the institutional outlook has dropped from the 5.8% forecast of six months ago to 4.1% with the current projections."

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.