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Nonfarm payroll employment in February increased by 20,000, seasonally adjusted, from January and by 2,509,000 (1.7%) year-over-year (y/y) from February 2018, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate was 3.8%, down from 4.0% in January and from 4.1% in February 2018. Construction employment decreased by 31,000 for the month but rose by 223,000 (3.1%) y/y to 7,422,000, following an above-average increase in January (53,000) and amid widespread, unusually severe weather. Average hourly earnings in construction rose 3.1% y/y to $30.45, 10.1% above the average for all private-sector employees ($27.66, a 3.4% y/y increase). Theunemployment rate in construction, not seasonally adjusted, fell to 6.2% (from 7.8% in February 2018), and the number of unemployed jobseekers with construction experience declined to 588,000 (down from 732,000). These were the lowest February figures in the 20-year history of both series. (Not-seasonally-adjusted data may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.) The above-average increases in construction employment and pay relative to all industries suggest the drop in employment in February is more likely due to timing or difficulty finding qualified workers than a downturn in demand.
Construction spending totaled $1.293 trillion at a seasonally adjusted annual rate in December, down 0.6% from November but up 1.6% from December 2017, the Census Bureau reported on Monday in a release that was delayed a month by the government shutdown. (January data is now scheduled for release on March 13.) For 2018 as a whole, construction spending totaled $1.298 billion, up 4.1% from 2017, following a 4.5% increase the year before. Public construction spending decreased 0.6% for the month but rose 4.2% y/y and 6.6% for the full year—a considerable turnaround from -3.2% in 2017. Of the three largest public segments, highway and street construction declined 0.9% for the month but increased 1.5% y/y and 4.2% for the full year; educational construction was flat for the month, up 7.9% y/y and up 3.8% for the full year; and transportation construction was down 1.5% for the month, up 7.5% y/y and up 15% for the year (37% for state and local airport construction and 1.5% for other public transportation—port, transit and passenger rail). Private nonresidential construction spending gained 0.4% for the month, 3.4% y/y and 3.5% for the full year, compared to 1.3% in 2017. Of the four largest components, power was unchanged for the month but rose 8.6% y/y and 3.9% for the year (comprising a 1.4% gain for electric power construction and 12% for oil and gas pipelines and field structures); commercial was down 1.0% for the month and down 4.6% for the year but up 2.0% for the year (with retail categories down 6.4%, warehouse up 15% and farm down 2.8%); manufacturing, up 1.7% for the month, 5.7% y/y and -1.7% for the year; and office, flat for the month, up 7.7% y/y and up 8.4% for the year. Private residential spending slid 1.4% in December and 1.3% y/y but increased 1.1% for the year, compared to a 12% gain in 2017. New multifamily construction increased 3.1% for the month, 5.2% y/y and 0.7% for the year; new single-family construction slumped 3.2% in December and -5.0% y/y but increased 5.2% for the year; and residential improvements decreased 0.4% in December and increased 1.9% y/y and 1.5% for the year.
Housing starts rebounded 19% at a seasonally adjusted annual rate of 1,230,000 units in January from a downwardly revised December rate (1,037,000 units, down 14% from November), the Census Bureau reported today. (The report was delayed by the government shutdown from December 22 through January 25, which "could make it more difficult to determine exact start and completion dates," the agency said.) Multifamily starts (five or more units), which are extremely volatile, rose 4% for the month but plunged 34% y/y. Single-family starts soared 25% in January and increased 4.5% y/y.Building permits rose 1.4% in January but declined 1.5% y/y. Multifamily permits increased 4.8% and 6.9%, respectively. Single-family permits in January slipped 2.1% from December and 6.7% y/y.
Highway and street construction spending, which recovered from a 4.0% decrease in 2017 to a 4.2% gain in 2018, may be poised to move higher in 2019 and 2020. Investment research firm Thompson Research Group reported on Wednesday in its quarterly State Lettings Report that lettings in July through December 2018 in the 15 states it follows increased 13% y/y, with these changes by state:Arizona and California each up 68%, Colorado up 21.5%, North Carolina up 196%, South Carolina up 32% and Tennessee up 35%. Georgia and Texas were flat y/y while Florida and Virginia were off 57% and 45%, respectively
"A letting is the actual process of awarding contracts to a general contractor and is the last step before construction begins. Once a contract is awarded, construction can begin in as little as one to three months, depending on the type of work. Construction may last from a month to 3-4 years or longer." Governors or legislators in numerous states have proposed significant fuel or other tax increases, as well as greater use of tolling, to fund highway construction.
The outlook remains dismal for retail construction. "Year to date, U.S. retailers have announced 4,810 store closures and 2,264 store openings," Coresight Research reported on Thursday in its "Store Openings and Closures Tracker: Week 10." That follows 5,528 closing that the firm tracked in 2018 and a record 8,139 in 2017. Closings lead to construction spending on reconstruction and improvements for new tenants but they are a negative overall for demand for retail construction.
Data DIGest is a weekly summary of economic news. All rights reserved. Sign up at http://store.agc.org. Editor: Ken Simonson, Chief Economist, AGC, simonsonk@agc.org
