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AGC's Data DIGest: March 22-25, 2016

Most states add construction jobs in February; openings climb in January, hire rate falls

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Seasonally adjusted construction employment rose in 43 states and the District of Columbia from February 2015 to February 2016 and declined in seven states, an AGC analysis of Bureau of Labor Statistics (BLS) data released Friday showed. California again added the most jobs (53,800 jobs, 7.6%), followed by New York (19,100 jobs, 5.5%) and Massachusetts (14,600 jobs, 11%). Hawaii added the highest percentage of new construction jobs during the past year (19%, 6,300 jobs), followed by Rhode Island (15%, 2,400 jobs), Massachusetts and New Hampshire (10%, 2,400 jobs). North Dakota lost the highest percent and total number of construction jobs (-14.5%, -5,300 jobs). Other states that lost jobs for the year include Alaska (-8.2%, -1,500 jobs), Wyoming (-7.2%, -1,700 jobs), West Virginia (-6.9%, -2,300 jobs), Kansas (-6.5%, -4,000 jobs), Mississippi (-1.7%, -800 jobs) and Pennsylvania (-1.4%, -3,200 jobs). Several of the states with the largest percentage increases probably benefited from weather that was more favorable this February than a year ago, while the states with the steepest declines have been hurt by the pullback in oil and gas drilling, coal mining and farm income. From January to February, seasonally adjusted construction employment increased in 27 states, shrank in 21 states and D.C., and held steady in Tennessee and Rhode Island. (AGC's rankings are based on seasonally adjusted data, which is available only for construction, mining and logging combined in D.C., Hawaii, Tennessee and four other states.)

Job openings in construction as a share of payroll employment reached the highest January level in the 16-year history of the series, an AGC analysis of BLS data released on March 17 found. Both the number of openings on the last business day of January (185,000) and the rate (2.7 openings per 100 employees) have risen every January since 2009 and have more than quadrupled over that period. Meanwhile, the rate of hires has fluctuated but set a new low for January (4.5 per 100 employees). The drop in hiring despite rising openings is consistent with contractor reports of difficulty in finding qualified workers. In contrast, in a recent Monthly Labor Review article that analyzed 2000-14 annual average hiring and opening rates in 18 sectors, BLS statistician Charlotte Oslund noted, "Construction is the one industry in which hires are always high and job openings are always low."

The value of new construction starts in February increased 10% from January's level at a seasonally adjusted annual rate, Dodge Data & Analytics reported on February 19, based on data it collected. "Much of the lift in February came from the nonbuilding construction sector, as its electric power and gas plant category included a $3 billion segment of a liquefied natural gas (LNG) export terminal in Texas as well as the start of six power plant projects valued each in excess of $200 million. Nonresidential building also helped out in February with a moderate gain, resuming its hesitant upward track after the lackluster activity reported at the outset of 2016. However, residential building settled back in February following its improved January performance. For the first two months of 2016, total construction starts on an unadjusted basis were...down 16% from the same period a year ago which featured the start of several massive LNG terminal projects. If the volatile electric power and gas plant category is excluded, total construction starts on a seasonally adjusted basis in February would be down 1% from January, while the year-to-date comparison on an unadjusted basis would show a 6% decline," with residential building up 9%, nonbuilding construction starts down 34% and nonresidential building down 21%. "Additional perspective is obtained by looking at...the 12 months ending February 2016 versus the 12 months ending February 2015, which lessens the volatility present in comparisons of just two months. On this basis, total construction starts were up 2% as the result of this performance by major sector—residential building, up 15%; nonbuilding construction, up 2%; and nonresidential building, down 12%."

Housing starts soared 5.2% at a seasonally adjusted annual rate from January to February and 31% from February 2015 to February 2016, the Census Bureau reported on March 16. Single-family starts jumped 7.2% and 37%, respectively. Multifamily (buildings with 5 or more units) starts climbed 2.4% and 17%. Building permits, a fairly reliable predictor over time of near-term starts, especially single-family, fell 3.1% for the month but rose 6.3% year-over-year. Single-family permits increased 0.4% and 17%, respectively. Multifamily permits dropped 9.1% and 9.7%. Nevertheless, multifamily permits for January and February combined (55,500) continued to outpace starts (47,000), suggesting more projects may begin soon.

Consultancy IHS and the Procurement Executives Group (PEG) reported on Wednesday that "construction costs fell again in March....The headline current IHS PEG Engineering and Construction Cost Index...registered 44.6 this month, up from 41.3 in February. The headline index has been consistently below the neutral mark [in which a reading higher than 50 represents upward pricing strength; below 50, downward pricing strength] for 15 months. The current materials/equipment price index showed some improvement, moving up from 36.9 in February to 41.8 in March. The sub-index...has been registering falling prices for more than a year [and] was hovering below 40 for the last three months. This month's increase...is driven by a slight uptick" in underlying components, though all except ready-mix concrete are still showing falling prices. The index for "subcontractor labor prices rose in March. However, the index retreated from 51.5 in February to 51.0 this month. The sub-index has been above the neutral mark for the last five months, although still significantly lower than its historical average."

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