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AGC's Data DIGest: May 30-June 2, 2017

Employment climbs nationally in May and in most metros in April; spending slips

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 May rose by 138,000, seasonally adjusted, from April and by 2,226,000 (1.6%) year-over-year (y/y), the Bureau of Labor Statistics (BLS) reported Friday. The unemployment rate dipped to 4.3% from 4.4% in April. Construction employment increased by 11,000 for the month and 191,000 (2.6%) y/y to 6,881,000, the largest total since October 2008. Average hourly earnings in construction increased 2.2% y/y to $28.68, or 9.4% higher than the average for all private-sector employees ($26.22, a y/y gain of 2.5%). Average weekly hours in construction totaled 39.2, the highest May level since the series began in 2006. The unemployment rate in construction, not seasonally adjusted, was 5.3%, marginally higher than in May 2016 (5.2%) but the second-lowest May rate since the series began in 2000. (Not-seasonally-adjusted employment may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.) The longer workweek and low unemployment rate suggest contractors are having trouble finding unemployed jobseekers with experience.

Construction spending totaled $1.219 trillion at a seasonally adjusted annual rate in April, down 1.4% from the rate in March but up 6.7% y/y from the April 2016 rate, the Census Bureau reported on Thursday. The March rate was revised up sharply to $1.236 trillion, a record (without adjusting for inflation). Private residential spending in April decreased 1.2% for the month but jumped 16% y/y. New multifamily construction rose 10% y/y; new single-family construction climbed 7.7%; and residential improvements—a volatile series that Census often revises substantially in subsequent months—soared 32%. Private nonresidential spending declined 0.6% from March but increased 4.3% y/y. By subsegment, in descending order of April size, power (electric power plus oil and gas pipelines and field structures) rose 1.5% y/y; commercial (retail, warehouse and farm) added 13%; manufacturing skidded 8.4%; office gained 15%; and health care dipped 0.1%. Public construction tumbled 3.7% for the month and 4.4% y/y. Of the three largest public components, highway and street construction edged up 0.3% y/y; educational construction slipped 0.2%; and transportation (transit, passenger rail, ports and airports) climbed 2.4%.

"Contractors are projecting construction staff wages to increase an average of 3.4% (excludes 0% projections), based on the 311 companies in this 35th edition of the Construction/CM Staff Salary Survey," compensation consultancy PAS, Inc. reported in its June Contractor Compensation Quarterly. "For pay increase comparison—according to the WorldatWork, nationally, exempt professionals saw 2016 increases of 3.0% and are reporting 2017 increases of 3.1%. [Construction] pay increases seem to have leveled off. The 2016 C/CM Staff actual increase came in at 3.6%. Though the projected 2017 increase is 3.4% for professionals & middle managers, historically predictions are usually about .5% low, so year-end 2017 most likely will exceed 2016's 3.6% increase.[A]ctual changes in critical job families changed at a faster pace. For example, in the project supervision job family, the actual change in base pay from 2016 to 2017 ranged from 4.7% (assistant superintendents) to 7.0% (superintendents) with project superintendents averaging 6.1% and construction managers coming in at 6.9%. Similarly, the project management job family saw entry level project engineers jumping 5.0% with experienced PE's changing 6.8%, project managers moving 6.2% and senior project managers averaging 5.5%. Critical specialized positions also saw exceptional increases with risk managers changing 6.7% and safety directors recording an 8.0% increase in the past year."            

Construction employment, not seasonally adjusted, rose from April 2016 to April 2017 in 217 (61%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, fell in 89 (25%) and was stagnant in 52, according to an AGC releaseand mapon Wednesday. (BLS combines mining and logging with construction in most metros.) The largest gains again occurred in Riverside-San Bernardino-Ontario, Calif. (14,600 construction jobs, 16%), followed by Tampa-St. Petersburg-Clearwater (8,900 construction jobs, 13%) and Las Vegas-Henderson-Paradise (8,500 construction jobs, 16%). The largest percentage gains occurred in Lake Charles, La. (29%, 5,300 construction jobs), followed by Lewiston, Idaho-Wash. (23%, 300 construction jobs); Detroit-Dearborn-Livonia (18%, 3,600 construction jobs); Riverside-San Bernardino-Ontario and Las Vegas-Henderson-Paradise. The largest job losses were in Houston-The Woodlands-Sugar Land (-7,600 construction jobs, -3%), followed by St. Louis (-4,000 combined jobs, -6%); the Chicago-Naperville-Arlington Heights division (-3,800 construction jobs, -3%) and the Middlesex-Monmouth-Ocean, N.J. division (-3,200 combined jobs, -8%). The largest percentage losses occurred in Casper, Wyo. (-21%, -700 construction jobs), followed by Charleston, W.Va. (-16%, -1,200 combined jobs) and Gulfport-Biloxi-Pascagoula, Miss. (-12%, -1,100 combined jobs). 

"Most of the 12 Federal Reserve Districts reported that their economies continued to expand at a modest or moderate pace from early April through late May," the Fed reported on Wednesday in the latest "Beige Book" (named for the color of its cover), a summary of informal soundings of businesses in each district. Districts are identified by the headquarters cities. "Construction of new homes and nonresidential structures also continued to grow at modest to moderate rates...Rapidly rising costs for lumber, steel, and other commodities tended to push input costs higher for some manufacturers and the construction sector." In the Philadelphia district, "The pace of nonresidential construction and existing homes sales ticked up." In the Chicago district, "construction and real estate grew modestly." In the Minneapolis district, "Commercial construction increased in some regions but was flat in others and slower in segments outside of multifamily building."

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