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AGC's Data DIGest: May 26-30, 2014

More metros add jobs in April; construction costs stay mild in first quarter, Means says

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.

From April 2013 to April 2014 construction employment increased in 220 out of 339 metropolitan areas for which the Bureau of Labor Statistics reports construction data, declined in 70 and was unchanged in 49, according to an analysis that AGC released last Tuesday. (The agency combines mining and logging with construction in most metros to avoid disclosing data for industries with few firms. Because metro data is not seasonally adjusted, comparisons with months other than April are not meaningful.) Three divisions of larger metros added the most jobs over the year: Los Angeles-Long Beach-Glendale (11,100 construction jobs, 10%), followed by Dallas-Plano-Irving (9,500 combined jobs, 9%) and Santa Ana-Anaheim-Irvine, Calif. (8,500 construction jobs, 11%). The largest percentage gains occurred in El Centro, Calif. (42%, 800 combined jobs) and Steubenville-Weirton, Ohio-W. Va. (35%, 600 combined jobs). The largest job losses occurred in the Bethesda-Rockville-Frederick, Md. division (-3,700 combined jobs, -11%) and the Gary, Ind. division (-2,900 construction jobs, -15%). The steepest losses occurred in Atlantic City-Hammonton, N.J. (-18%, -900 combined jobs) and Gary.

Building construction costs increased 0.4% in the first quarter of 2014 (after rising 0.3% in the fourth quarter of 2013) and 3.0% over 12 months, the RS Means division of Reed Construction Data reported last week, based on data it gathered in 30 major cities. (The index is a mix of material, labor and equipment costs to build nine structure types.) The average wage for 20 skilled construction trades rose 0.4% in the first quarter and 2.5% from a year earlier.

“After several major manufacturers of construction materials increased prices over the past few months, few have announced price increases since our April newsletter,” Jim Sobeck, editor of New South Construction Supply eNews wrote Friday. However, “one major rebar and wire rod mill announced a price increase for June….Lumber prices increased in May and are expected to continue to increase into June….Due to the wire rod price increase, several domestic wire mesh manufacturers…announced a 5% price increase effective June 2nd….polyethylene sheeting prices remained unchanged in May and should hold at current levels through June….Masonry reinforcing and anchor prices have remained mostly unchanged for most of this spring and are expected to stay at current levels through June.”

“North American industrial project spending is forecast to reach about $401 billion this year, about 11% more than was forecast to take place last year, Michael Bergen, Industrial Info's executive vice president, told about 100 attendees at the Industrial Market Outlook 2014 briefing” on May 7, Industrial Info reported on May 21. “A dramatic gain in natural gas production is fueling a U.S. manufacturing renaissance, the impacts of which are evident in seven different industries, including Power, Chemical Processing and Industrial Manufacturing, he said.”

Production of apartments and condominiums showed positive growth in the first quarter of 2014,” according to the latest Multifamily Production Index (MPI) released last Thursday by the National Association of Home Builders (NAHB). “The index increased three points to 53, which is the ninth consecutive quarter with a reading of 50 or above. The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. The MPI provides a composite measure of three key elements of the multifamily housing market: construction of market-rate rental units, low-rent units and ‘for-sale’ units, or condominiums. In the first quarter of 2014, the MPI component tracking builder and developer perceptions of low-rent units increased one point to 48 and for-sale units jumped eight points to 54. Meanwhile, the index tracking market-rate rental properties slipped one point to 59, but has remained consistently above 50 since the fourth quarter of 2010.”

U.S. house prices rose 1.3% in the first quarter of 2014 and 6.6% over the past year, the Federal Housing Finance Agency reported last Tuesday. This is the 11th consecutive quarterly price increase in the purchase-only, seasonally adjusted House Price Index (HPI), which is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The index rose in 42 states and the District of Columbia during the first quarter of 2014 (up from 38 states during the fourth quarter of 2013) and in all locations except Vermont over the past year. The top annual appreciation occurred in Nevada, 21%; the District of Columbia, 20%; California, 16%; and Arizona, 15%. Annual appreciation was the least in Vermont, -1.2%; Delaware, 0; and Maine, 0.1%. Of the 20 highest-appreciating metros over the past year (based on purchase and refinance mortgages), 15 were in California, led by Merced, 31%, and Modesto, 29%. Of the 280 metros with sufficient transactions to calculate reliable HPIs, 57 had negative appreciation in the past year, with Fond du Lac, Wis. experiencing the steepest drop, -4.1%, followed by Las Cruces, N.M., -4.0%. Sustained appreciation yields higher property tax receipts for local governments and school districts, which can lead to greater municipal and school construction.

The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at www.agc.org/datadigest.


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