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AGC's Data DIGest: June 15-22, 2015

Forty states add jobs in May; job openings outpace hires; nonres, housing starts pick up

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 40 states and the District of Columbia from May 2014 to May 2015 and declined in 10 states, an AGC analysis of Bureau of Labor Statistics (BLS) data released on Friday showed. California again added the most construction jobs (46,600 jobs, 6.9%), followed by Florida (28,200, 7.2%), Texas (20,300, 3.1%), Washington (18,100, 11.6%) and North Carolina (15,600, 8.8%). Idaho again added the highest percentage of new construction jobs (11.8%, 4,200), followed by Washington, Michigan (10.7%, 15,100) and North Carolina. The steepest percentage losses again occurred in West Virginia (-12.3%, -4,200) and Mississippi (-7.2%, -3,600). For the month, there were gains in 28 states and D.C., losses in 19, and no change in Alaska, Indiana and Maine. The largest monthly percentage gains occurred in six northeastern states (Connecticut and New Hampshire, 4.3% each; New York, 4.2%; Vermont, 4.1%; Maryland, 2.9%; and Massachusetts, 2.7%), possibly reflecting a rebound from prolonged bad winter weather. (BLS combines mining and logging with construction in D.C., Maryland and five other states to avoid disclosing data about industries with few employers.)

"The U.S. currently has 5.4 million job openings—the most since the current recordkeeping system began in 2000—but the number of people actually getting hired has yet to fully recover from the recession," according to BLS's April Job Openings and Labor Turnover Survey (JOLTS) report, the Wall Street Journal reported on Friday. "Across the economy, the time it takes to fill jobs is lengthening....Stephen Davis, an economist at the University of Chicago, found that as of April the average job sat vacant for 27.3 days before being filled, nearly double the 15.3 days it took to fill a job in mid-2009....Part of the increase in vacancy owes to improvement in the economy. There are simply more openings and fewer candidates." An AGC analysis of JOLTS data showed that ratio of job openings at month's end to monthly hires in construction has roughly tripled, from as low as .15 in early 2011 when industry employment began climbing, to .47 in April 2015. This week, AGC sent contractors a survey to gather information about worker availability; Data DIGest readers who work for contractors are encouraged to fill it out.

Two reports suggest construction starts are picking up overall but remain mixed by category. "New construction starts in May climbed 3% compared to April's already elevated pace" at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Friday, based on data it collected. Year-to-date starts in the first five months of 2015 combined rose 25% from the same period of 2014. (Starts count the full value of a project in the month it begins, leading to large variations in year-over-year comparisons when only one of the months includes a multibillion dollar project. Year-to-date comparisons dilute this effect somewhat.) "The nonbuilding construction sector provided much of the lift [59% over April, 70% year-to-date], given an exceptionally strong amount reported for the electric power and gas plant category, which reflected a massive liquefied natural gas (LNG) export terminal project in Texas being entered as a May start. Residential building showed modest improvement in May [2% over April, 14% year-to-date], helped by more multifamily housing, while nonresidential building fell sharply from its heightened April volume [-28%, +8% year-to-date]. The current year has included the start of 12 massive projects valued each at $1 billion or greater, compared to five [year-to-date in] 2014. If these projects...are excluded, total construction starts on an unadjusted basis would be up a more moderate 10% year-to-date. 'The presence of unusually large projects, notably several LNG terminals and several petrochemical plants, continues to lift the volume of total construction starts above its underlying trend,' stated [Chief Economist Robert Murray]. 'This lift from unusually large projects is expected to become less pronounced as 2015 proceeds, which still leaves total construction starts growing at about a 10% clip. Nonresidential building is witnessing a broader expansion this year, with its institutional building segment contributing to the upturn along with the strengthening trend already established for commercial building. Residential building is seeing further growth for multifamily housing although any upward movement by single family housing remains hesitant. The public works sector has proven to be surprisingly resilient so far in 2015, as states and localities have picked up some of the slack from essentially flat federal funding. On a cautionary note, public works still faces near-term uncertainty, since the recently expired federal transportation legislation was extended by Congress only through the end of July, and the Highway Trust Fund will need to be shored up once again.'"

The value of nonresidential construction starts increased 7.3%, not seasonally adjusted, from May 2014 to May 2015 and 2.0% year-to-date, CMD (formerly Reed Construction Data) reported on June 12, based on data it collected. Nonresidential building starts sank 4.8% year-to-date, as declines of 14% year-to-date in institutional building starts and 8.9% in commercial building starts more than offset a 163% leap in industrial (manufacturing) building starts. Heavy engineering starts jumped 15% year-to-date, led by gains in the largest subcategories: road/highway, 19%, and water/sewage, 9.8%.

Housing starts increased 5.1% from May 2014 to May 2015 and 6.0% year-to-date, the Census Bureau reported on Tuesday. Single-family starts increased 6.8% year-over-year and 6.7% year-to-date, and multifamily (buildings with 5 or more units) starts rose 2.6% and 4.3%, respectively. Building permits, a fairly reliable predictor over time of near-term starts, especially single-family, climbed 25% year-over-year and 11% year-to-date overall, with single-family permits rising 9.1% and 7.5%, respectively, and multifamily up 54% and 15%. Multifamily permits year-to-date (174,000) exceed starts (140,000), suggesting more projects may begin soon. Single-family permits and starts both stand at 273,000 year-to-date.

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