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The producer price index (PPI) for final demand in February, not seasonally adjusted, increased 0.3% from January and 2.8% year-over-year (y/y) from February 2017, the Bureau of Labor Statistics (BLS) reported on Wednesday. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 31% of total construction. The PPI for final demand construction, not seasonally adjusted, climbed 0.8% for the month and 3.5% y/y, the largest y/y increase since July 2012. The PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of five categories of buildings—rose 3.6% y/y. Increases ranged from 2.5% y/y for office buildings to 3.6% for health care buildings, 3.7% for warehouses, 4.2% for schools and 4.6% for industrial buildings. PPI increases for subcontractors' new, repair and maintenance work on nonresidential buildings ranged from 1.1% y/y for roofing contractors to 3.5% for concrete contractors, 4.3% for plumbing contractors and 4.4% for electrical contractors. The PPI for inputs to construction—excluding capital investment, labor and imports—comprises a mix of goods (56%) and services (44%). This index increased 4.4% y/y, which exceeded the 3.6% PPI increase for new nonresidential building construction, implying a cost squeeze for contractors. The PPI for inputs to construction, goods (including items consumed by contractors, such as diesel fuel) rose 5.2% y/y, as the sub-index for energy soared 18%, while the PPI for goods less food and energy rose 3.6%. The index for inputs to construction, services increased 3.5% for the year. PPIs for inputs to seven types of new nonresidential structures had increases ranging from 3.4% for industrial structures to 5.6% for power and communications structures. PPIs for inputs to new residential structures rose 4.7% y/y for single-family housing and 4.2% for multifamily. Materials important to construction that had notable one- or 12-month price changes include diesel fuel, down 2.0% in February but up 38% y/y; lumber and plywood, up 4.4% for the month and 13% y/y; aluminum mill shapes, 2.9% and 12%, respectively; copper and brass mill shapes, -0.9% and 10%; gypsum products, 7.2% and 8.0%; and steel mill products, 2.3% and 4.8%. Among services important to construction, the PPI for truck transportation of freight rose 0.6% for the month and 5.6% y/y.
Construction materials costs have already risen since these prices were collected in mid-February, with more increases likely soon. On March 8, after President Trump announced tariffs of 25% on steel and 10% on aluminum, the White House issued a presidential proclamation stating that the tariffs would apply "to goods entered, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on March 23, 2018. This rate of duty, which is in addition to any other duties, fees, exactions, and charges applicable to such imported steel articles, shall apply to imports of steel articles from all countries except Canada and Mexico." Despite the 15-day delay in the effective date and the exemption for Canada and Mexico, one reader sent a notice dated March 8 from a roofing products supplier that it "will increase pricing on steel coil and accessories another 15% so the total increase is 25% matching the tariff and aluminum coil and accessories another 10% because of the tariffs." Readers are invited to send price-change letters to email@example.com.
Construction employment, not seasonally adjusted, rose from January 2017 to January 2018 in248 (69%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, fell in 68 (19%) and was unchanged in 42, according to an AGC analysisreleased today. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The largest gain again occurred in Riverside-San Bernardino-Ontario, Calif. (10,600 construction jobs, 12%), followed by Phoenix-Mesa-Scottsdale (9,900 construction jobs, 9%), Houston-The Woodlands-Sugar Land (9,200 construction jobs, 4%) and the Los Angeles-Long Beach-Glendale division (9,000 construction jobs, 7%). The largest percentage gains occurred in Merced, Calif. (38%, 800 combined jobs); the Lawrence-Methuen Town-Salem, Mass.-N.H. division (26%, 700 combined jobs); Midland, Tex. (24%, 5,900 combined jobs); and Greeley, Colo. (23%, 3,500 combined jobs). The largest job losses were in Baton Rouge, La. (-6,600 construction jobs, -13%); St. Louis, Mo. (-3,300 combined jobs, -5%); the Montgomery-Chester-Bucks Counties, PA division (-2,600 combined jobs, -5%); and Columbia, S.C. (-2,500 combined jobs, -12%). The largest percentage losses occurred in Auburn-Opelika, Ala. (-32%, -1,200 combined jobs); followed by Monroe, Mich. (-16%, -300 combined jobs); Baton Rouge and Columbia, S.C. (Because normal monthly weather- and holiday-related differences cause fluctuations in not-seasonally-adjusted levels, comparisons between totals for January and other months may not be meaningful.) BLS made routine annual adjustments to prior-year data.
There were 250,000 job openings in construction, not seasonally adjusted, at the end of January (up from 159,000 in January 2017), BLS reported today in its latest Job Openings and Labor Turnover Survey (JOLTS) release. The job openings rate was 3.6 per 100 open and filled jobs, the highest January rate yet (dating to 2001). The industry hired 311,000 employees in January (down from 369,000 in January 2017). BLS reported on March 9 that there were 707,000 unemployed jobseekers in January whose last job was in construction, the lowest January total in the 19-year history of that series. Together, these figures suggest contractors are still eager to hire more workers but are having difficulty finding ones who have construction experience. BLS made routine annual adjustments to prior-year data.
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.