Job gains resume in May; spending grows in April; Beige Book notes expansion
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Nonfarm payroll employment increased by 175,000, seasonally adjusted, in May and 2,115,000 (1.6%) over 12 months, the Bureau of Labor Statistics reported today. Construction employment rose by 7,000 for the month and totaled 5,804,000, seasonally adjusted, the highest mark since August 2009 and a gain of 189,000 (3.4%) over the past year. Total hours worked in construction increased by 5.2% over 12 months, implying that contractors are lengthening working hours and also hiring new workers. Residential construction employment (residential building and specialty trade contractors) rose by 5,500, seasonally adjusted, for the month and 94,400 (4.6%) for the year. Nonresidential employment (building, specialty trades, and heavy and civil engineering construction) rose by 1,700 and 95,500 (2.7%), respectively. Architectural and engineering services employment, a harbinger of future demand for construction, rose 2.1% over the year. The unemployment rate for jobseekers who last worked in construction tumbled to the lowest May level in five years--10.8%, down from 14.2% in May 2012 and a May high of 20.1% in 2010. The number of unemployed former construction workers shrank by 259,000 over the year, implying that workers are leaving the industry as well as being rehired. (Industry unemployment data are not seasonally adjusted and should only be compared year-over-year, not across months.)
Construction spending in April totaled $861 billion at a seasonally adjusted annual rate, up 0.4% from March and 4.3% from April 2012, the Census Bureau reported on Monday. Private residential spending inched down 0.1% for the month but climbed 19% year-over-year. Private nonresidential spending rose 2.2% and 0.6%, respectively. Public construction spending decreased 1.2% and 5.1%. Of the three residential components, new single-family construction rose 1.4% and 39%; improvements to existing single- and multifamily buildings fell 3.3% and 7.0%; and new multifamily spending gained 3.4% and 49%. The three largest private nonresidential components (in descending order of current size) varied: power construction (including conventional and renewable power plus oil and gas fields and pipelines) jumped 11% for the month but slipped 2.8% from a year ago; manufacturing construction, fell 2.6% in April but increased 2.2% over 12 months; and commercial (new and renovated retail, warehouse and farm) edged up 0.7% and 1.9%. Of the top two public categories, highway and street construction rose 0.5% in April but fell 3.4% year-over-year, while educational slumped 4.4% and 13%.
Informal soundings of businesses in the 12 Federal Reserve districts suggest “overall economic activity increased at a modest to moderate pace” from late early April to May 23, the Fed reported on Wednesday in the latest Beige Book, so named for the color of its cover. Residential construction “increased at a moderate to strong pace in all districts.… Continuing a theme from the previous report, strength in residential construction was a boon to manufacturers who supplied that industry. Firms in the Philadelphia district supplying the homebuilding sector reported strong orders, and the Cleveland district noted that suppliers to residential construction were among those seeing the strongest activity, while the Richmond, St. Louis, Dallas and San Francisco districts all reported increased demand for lumber or wood products…. Several districts noted increases in multifamily projects. The Minneapolis district reported that many markets saw huge percentage increases in building permits from a year ago….The Richmond district noted that increased construction has pushed up the price of building lots, and the Atlanta district reported that the lack of available lots has constrained building activity. The Philadelphia district commented that builders are facing problems, as the long housing recession has disrupted the supply chain for materials and the pool of skilled workers. Commercial real estate and construction activity expanded at a modest to moderate pace in most districts. The New York district reported that the Manhattan market is particularly robust…. A market in the Richmond district had more hotels complete construction, and retail space was absorbed at a faster pace…. The Philadelphia district said that most construction activity is related to ongoing demand for industrial warehouse space, higher education facilities and public utility infrastructure. The Atlanta district reported that most activity was coming from build-to-suit projects. The Dallas district noted an increase in office building construction. The Cleveland district said that many projects are in development, but new inquiries are weak. The San Francisco district noted that in some regions, construction of publicly funded commercial projects has slowed due to funding constraints from state and local governments….The Philadelphia and Cleveland districts reported higher construction materials prices. Meanwhile, the San Francisco district noted that prices for cement, logs and lumber edged up, while prices for wood products, steel and some metals declined.”
Inflation-adjusted gross domestic product (real GDP) increased in 2012 in the District of Columbia and all states except Connecticut, the Bureau of Economic Analysis reported on Thursday. “Construction turned up in 2012, after eight consecutive years of contraction; increasing by 3.2% nationally. This industry contributed to real GDP growth in 43 states and the District of Columbia.” Nationally, construction accounted for 0.1 percentage points of total GDP growth of 2.5%.
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