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AGC's Data DIGest: Mar. 23-Apr. 2, 2015

Construction spending flattens in February; employment rises in most states, metros

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Construction spending in February totaled $967 billion at a seasonally adjusted annual rate, down less than 0.1% from the rate in January, but up 2.1% from February 2014, the Census Bureau reported on Wednesday. Because unseasonably mild or severe weather can distort monthly comparisons in winter, it is more revealing to compare year-to-date figures for January and February combined. On that basis, total spending increased 2.0% from the same months of 2014, private residential spending slipped 1.0%, private nonresidential spending increased 4.3% and public construction spending gained 2.6%. The largest private nonresidential segment was "power" construction, which in Census' classification includes conventional and renewable power plus oil and gas fields and pipelines, and which plunged 17% year-to-date. This figures masks a huge difference between electric power, down 44%, and other (mainly pipelines), up 46%. The next largest private segments (in descending order of current size) were manufacturing construction, which soared 30%, propelled in part by a 56% leap in chemical manufacturing projects; commercial (new and renovated retail, warehouse and farm), up 17%, driven by a 50% jump in warehouse construction; and office, up 19%. Of the top two public segments, highway and street construction rose 1.5% year-to-date, while public educational spending slipped 0.7%. Of the three residential components, new single-family construction climbed 11%, new multifamily soared 32%, and improvements to existing residential structures tumbled 31%. Although improvements are included in totals, Census does not consider the estimate reliable enough to publish. It seems improbable that improvements would have fallen, let alone so steeply, when there were year-to-date increases in new-home sales (21%, Census reported on March 24) and existing-home sales (4%, according to National Association of Realtors reports).

Seasonally adjusted construction employment rose in 45 states and the District of Columbia from February 2014 to February 2015, held steady in Delaware and decreased in Indiana (-1.2%, -1,500 jobs), Maine (-1.2%, -300 jobs), West Virginia (-2.1%, -700 jobs) and Mississippi (-8.7%, -4,400 jobs), an AGC analysis of Bureau of Labor Statistics (BLS) data released on Friday showed. Texas again added the most jobs (44,600 jobs, 7.0%), followed by California (43,400 jobs, 6.5%) and Florida (29,600 jobs, 7.7%). North Dakota again added the highest percentage of construction jobs (14.7%, 4,800 jobs), followed by Idaho (14.3%, 5,000 jobs), Colorado (12.3%, 16,900 jobs) and Washington (11.6%, 18,000 jobs). (BLS combines mining and logging with construction in D.C., Delaware and five other states to avoid disclosing data about industries with few employers.

Construction employment, not seasonally adjusted, increased from February 2014 to February 2015 in 278 of the 258 metro areas (including divisions of larger metros) for which BLS provides construction employment data, decreased in 36 and was stagnant in 44, according to an AGC analysis of BLS data released today. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The number of metros with construction employment gains was the largest since March 2006. The Dallas-Plano-Irving division added the most construction jobs in the past year (12,800 combined jobs, 7%), followed by Denver-Aurora-Lakewood (11,600 combined jobs, 14%), the Seattle-Bellevue-Everett division (10,100 construction jobs, 14%) and Houston-The Woodlands-Sugar Land (8,900 construction jobs, 5%). The biggest 12-month percentage gains were in Wenatchee, Wash. (38%, 600 combined jobs), Lake Charles, La. (29%, 3,700 construction jobs) and Beaumont-Port Arthur, Texas (4,700 combined jobs, 27%). The largest job losses were in New Orleans-Metairie (-2,700 construction jobs, -9%), Gulfport-Biloxi-Pascagoula, Miss. (-1,900 combined jobs, -19%) and Cleveland-Elyria, Ohio (-1,700 combined jobs, -6%). The steepest percentage declines occurred in Monroe, Mich. (-23%, -700 combined jobs), Weirton-Steubenville, W.Va.-Ohio (-19%, -400 combined jobs) and Gulfport-Biloxi-Pascagoula. The large gains in North Dakota, Colorado, Texas and several of its metros show that the oil price slump hasn't been negative for all construction in those states. An AGC map shows that many states have a mix of construction job gains and losses among their metros.

The value of nonresidential construction starts, not seasonally adjusted, increased 3.3% year-to-date in January and February 2015 over the first two months of 2014 combined, CMD (formerly Reed Construction Data) reported on Wednesday, based on data it collected. Heavy engineering starts increased 14% but nonresidential building starts slid 2.9%, with institutional buildings rising 4.2% and commercial buildings declining 6.7%.

New construction starts (including residential) increased 16% from January to February at a seasonally adjusted annual rate, Dodge Data & Analytics (formerly McGraw Hill Construction) reported on March 19, based on data it collected. "Much of the lift came from three massive projects valued each in excess of $1 billion that were included as February construction starts. The nonbuilding construction sector was boosted by an $8.4 billion liquefied natural gas export terminal in Louisiana and a $1.2 billion solar power facility in California, while nonresidential building registered a sharp gain partly as the result of a $3.0 billion petrochemical plant in Texas. Residential building also strengthened in February, as growth for multifamily housing outweighed a loss of momentum by single-family housing. For the first two months of 2015, total construction starts on an unadjusted basis were up 34% from the same period a year ago. If projects in excess of $1 billion are excluded, the result would be more moderate gains for total construction"—up 10% for the month and up 8% year-to-date.

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