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AGC's Data DIGest: November 12-16, 2018

Year-over-year employment increases in 44 states; reports are mixed for starts, billings

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.

Seasonally adjusted construction employment rose in 44 states and the District of Columbia year-over-year (y/y) from October 2017 to October 2018 and declined in six states, an AGC analysis of Bureau of Labor Statistics data released last week showed. Texas added the most construction jobs y/y (49,900 jobs, 6.9%), followed by Florida (43,400, 8.5%), California (30,000, 3.6%), Georgia (21,600, 11.6%), Arizona (18,000, 12.1%) and New York (15,600, 4.1%). Arizona added the highest percentage of new construction jobs during the past year, followed by Georgia, Nevada (11.4%, 9,500 jobs), Oregon (10.5%, 10,400), New Hampshire (10.3%, 2,800) and Florida. Construction employment reached a record high in five states: Massachusetts, New York, Oregon, Texas and Washington. Six states shed construction jobs between October 2017 and 2018. The largest declines and steepest percentage losses occurred in New Jersey (-3,800 jobs, -2.5%), followed by South Carolina (-1,700, -1.7%) and Oklahoma (-500, -0.6%). Among the 36 states with one-month job gains between September and October, Florida (3,000 jobs, 0.5%) and California (3,000, 0.4%) had the largest gains. Iowa added the highest percentage of construction jobs for the month (2.0%, 1,600), followed by Wyoming (1.9%, 400). For the month, construction employment declined in 12 states and was unchanged in Connecticut and Maine. Louisiana lost the most construction jobs (-1,900 jobs, -1.3%), followed by Oklahoma (-900, -1.2%). Mississippi lost the highest percentage of construction jobs in October (-1.6%, -700 jobs), followed by Montana (-1.4%, -400) and Louisiana. (AGC's rankings are based on seasonally adjusted data, which in D.C. and six states is available only for construction, mining and logging combined.)

The value of construction starts in October, not seasonally adjusted, tumbled 15% y/y from October 2017, data provider ConstructConnect reported on Tuesday, while year-to-date starts for the first 10 months of 2018 combined declined 6.6% from the same period in 2017. Nonresidential building starts plunged 28% y/y and 10% year-to-date. Civil (heavy engineering) starts climbed 23% y/y and 7.8% year-to-date. Residential starts slumped 14% y/y and 9.7% year-to-date.

The Architecture Billings Index (ABI) topped the breakeven 50 mark for the 13th month in a row in October, with a seasonally adjusted score of 50.4, down from 51.1 in September, the American Institute of Architects reported on Wednesday. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings; any score above 50, on a 0-100 scale, indicates an increase in billings. Scores by practice specialty (based on three-month moving averages) varied, but all slowed from September: mixed practice, 52.7 (down from 53.4); multifamily residential, 52.3 (down from 54.9); institutional, 52.0 (down from 55.1); and commercial/industrial, 48.9 (down from 50.8).

Although the ABI for multifamily projects has been above 50 for 22 consecutive months, there are mixed views on the outlook. The Wall Street Journal reported on Wednesday, "Multifamily building permits have fallen each month since March, according to federal data. That type of slowdown suggests there should be less new apartment construction over the next two years, the typical time it takes to build an apartment property of any scale. Analysts say absorption of new units remains strong right now, despite the falloff in permitting....'The demand is there,' said Paula Munger, the National Apartment Association's director of industry research and analysis, referring to tenants. 'But labor's a big deal....the actual completions are being more and more delayed for that reason.'...In addition to rising costs, worries about future job growth—a driver of apartment demand—and the slower rent growth has damped permitting activity, [Reis senior economist Barbara Byrne] Denham said....Ms. Munger said demand for apartments remains robust."

The National Highway Construction Cost Index (NHCCI) increased 4.4% in June from March and 3.8% from June 2017, according to data the Federal Highway Administration posted on October 11. Both increases were accelerations from the previous quarter (0.8% from December 2017 to March 2018) and year (0.4% from June 2016 to June 2017). "FHWA uses data on State web-postings of winning bids submitted on highway construction contracts. The data represent a detailed universe of prices and quantities of pay items for those winning contracts. A pay item is a unit of work, construction material, labor, or service for which price and quantity is provided in the contract. The NHCCI covers the universe of the nation's highway projects [to] arrive at an average cost index for all highway construction."

"National average construction costs increased approximately 4.7% between July 2017 to July 2018," construction consultancy Rider Levett Bucknall reported on November 2 in a release accompanying its third-quarter 2018 quarterly cost report. The report covers 15 project types in 12 U.S. and two Canadian cities. "Our Comparative Cost Index tracks the 'true' bid cost of construction, which includes, in addition to costs of labor and materials, general contractor and sub-contractor overhead costs and fees (profit). The index also includes applicable sales/use taxes that 'standard' construction contracts attract....Our research suggests that between April 1, 2018 and July 1, 2018 the national average increase in construction was approximately 1.5%." Annual changes ranged from 0 in Honolulu to more than 6% in Chicago; Portland, Oregon; Phoenix and San Francisco.

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