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AGC's Data DIGest: March 28-April 1, 2016

March construction employment, February spending post hefty, diverse 12-month gains

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.

Nonfarm payroll employment in March increased by 215,000, seasonally adjusted, from February and by 2,802,000 (2.0%) over 12 months, and the unemployment rate inched up to 5.0% from 4.9% in February, the Bureau of Labor Statistics (BLS) reported today. Construction employment rose by 37,000 for the month (to 6,672,000) and by 301,000 (4.7%) year-over-year (y/y). Industry employment reached the highest level since December 2008. Residential construction employment (residential building and specialty trade contractors) increased by 13,400 for the month and 166,000 (6.8%) y/y. Nonresidential employment (nonresidential building, specialty trades, and heavy and civil engineering construction) rose by 23,900 for the month and 134,800 (3.4%) y/y. The number of unemployed jobseekers who last worked in construction declined from 831,000 in March 2015 to 768,000, the lowest March figure in 15 years. The unemployment rate for such workers dropped from 9.5% to 8.7%, the lowest March rate in a decade. (Industry unemployment data are not seasonally adjusted and should only be compared y/y, not across months.) Average hourly earnings—a measure of wages and salaries—in construction increased by 2.2% y/y.

Construction spending in February totaled $1.144 trillion at a seasonally adjusted annual rate, 0.5% below the upwardly revised January rate and up 10.3% y/y, the Census Bureau reported today. Spending growth was widespread and balanced among segments y/y, though monthly results diverged. Public construction dropped 1.7% for the month but climbed 9.2% y/y. Those results were driven largely by highway and street construction, which declined 2.1% for the month (following an exceptionally large gain—even after a downward revision—of 8.7% in January) but rose 25% y/y. The other major public segment, educational construction, plunged 4.2% from December but increased 5.2% y/y. Private residential spending rose 0.9% for the month and 11% y/y. New multifamily construction climbed 0.9% and 24%, respectively; new single-family construction, 1.2% and 11%; and residential improvements 0.5% and 6.4%. Private nonresidential spending sank 1.3% for the month but rose 11% y/y. By subsegment, in descending order of February size, power declined 0.9% for the month but increased 5.3% y/y (comprising a 9.7% y/y rise in oil and gas pipelines and field structures and a 3.0% rise in electric power facilities); manufacturing construction tumbled 5.9% for the month but edged up 0.8% y/y; commercial (retail, warehouse and farm) dipped 0.1% for the month but rose 9.9% y/y; office jumped 4.2% and 31%, respectively; and health care rose 2.0% and 4.7%.

State personal income—the sum of net earnings by place of residence, property income, and personal current transfer receipts—grew 4.4% on average in 2015, the Bureau of Economic Analysis (BEA) reported on March 24. "Construction earnings increased for the fifth consecutive year and is now higher than its previous peak before the Great Recession.... Earnings in construction grew 8.5% nationally, and was the leading contributor to the growth in personal income in two of the fastest growing states: Utah and Nevada." Construction earnings rose in 46 states, led by Hawaii (14%) and fell in four states and the District of Columbia. In the fourth quarter of 2015, construction earnings increased 3.0% nationally. Hawaii again had the largest gain (5.4%). North Dakota recorded the only decline (-0.7%).

The Architecture Billings Index (ABI) score rose to 50.3, seasonally adjusted, in February from 49.6 in January (any score over 50 indicates billings growth), the American Institute of Architects reported on March 23. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier less the percentage reporting lower billings. Firms with different practice specialties varied (based on three-month moving averages): multifamily residential, 53.0, up from 51.9 in January; commercial/industrial, 52.3, up from 50.5; institutional, 48.1, down from 49.9; and mixed practice, 47.7, up from 49.0.

Census released 2015 population estimates for counties and metropolitan areas on March 24. "After volatile swings in growth patterns during last decade's housing bubble and bust, [once more] population is growing faster in the South and West than in the Northeast and Midwest, and faster in suburban areas than in urban counties; both of these trends accelerated in 2015," Trulia Inc. Chief Economist Jed Kolko wrote in the March 24 e-newsletter CityLab. While the fastest-growing metro for each of the past three years—The Villages, Fla.—was not big enough to count as a metropolitan area in 2000, "five of the top 10 in 2015 were also in the top ten in 1980-2000, including Cape Coral–Fort Myers [Fla.], Austin, Orlando, Raleigh, and Las Vegas....On the flip side, seven of the 10 steepest declining metros in 2015 were also among the bottom 10 in 1980-2000; the other three in the bottom 10 in 2015 were in the bottom 20...The acceleration of population growth in the Northeast in 2009-2011 and moment when urban growth surpassed suburban growth in 2011 look like reactions to a housing bubble that brought unsustainable growth to the suburbs and the Sunbelt. That's not to say that nothing has changed: there have been dramatic shifts since the pre-bubble years in the composition of local populations. College-educated young adults are much more likely to live in high-density urban neighborhoods than they used to, while seniors are increasingly likely to remain in suburban single-family homes. But, in aggregate, local population growth in 2015 looks ever more like it used to before the housing bubble, with the Sunbelt and the suburbs widening their leads." These trends affect both demand for construction and likely supply of workers.

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