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Construction employment, not seasonally adjusted, increased between August 2017 and August 2018 in 287 (80%) of the 358 metro areas (including divisions of larger metros) for which the Bureau of Labor Statistics (BLS) provides construction employment data, fell in 35 (10%) and was unchanged in 36, according to an AGC analysis posted this week. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) That was the most metros with year-over-year increases since December 2014. The largest gains again occurred in Houston-The Woodlands-Sugar Land (28,900 construction jobs, 14%), the Dallas-Plano-Irving metro division (13,600 combined jobs, 10%) and Phoenix-Mesa-Scottsdale (13,600 construction jobs, 12%). The largest percentage gains again occurred in Merced, Calif. (32%, 800 combined jobs), followed by New Bedford, Mass. (26%, 700 combined jobs); Midland, Texas (24%, 7,000 combined jobs) and Weirton-Steubenville, W.Va.-Ohio (22%, 400 combined jobs). The largest job losses again were in the Middlesex-Monmouth-Ocean, N.J. division (-4,500 combined jobs, -11%), followed by the Camden, N.J. division (-2,600 combined jobs, -11%); St. Louis, Mo.-Ill. (-2,600 combined jobs, -4%); the Newark, N.J.-Pa. division (-2,400 combined jobs, -5%) and Nashville-Davidson—Murfreesboro—Franklin (-2,200 combined jobs, -5%). The largest percentage losses (-11% each) occurred in Camden and Middlesex-Monmouth-Ocean, followed by Spokane-Spokane Valley, Wash. (-9%, -1,300 combined jobs). Employment was at a record high for August in 70 metros (dating back in most areas to August 1990), the most August peaks since 2006; two areas set a new August low.
Investment analyst Thompson Research Group reported today that its third-quarter "contractor and surety survey continues to indicate that the non-res construction market is strong and the outlook is positive, with multiple sectors underpinning the strength....Many surety respondents believe we are still in the middle...of the growth cycle. To this point, and looking forward, the main challenges continue to be factors of constraint (labor and inflation in materials and freight costs), not demand. The majority of respondents' feedback points to robust activity continuing through the remainder of 2018 and 2019."
For the second month in a row, the value of new construction starts in August fell 9% at a seasonally adjusted annual rate, construction data provider Dodge Data & Analytics reported on Monday. "Weaker activity was reported in August for nonresidential building, down 19%, and residential building, down 7%. On the plus side, nonbuilding construction in August advanced 6%, reflecting a steady performance by public works as well as improvement for electric utilities following depressed activity earlier this year. During the first eight months of 2018, total construction starts on an unadjusted basis were...up 1% from a year ago. The year-to-date performance for total construction was restrained by a 45% drop for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts in this year's first eight months would be up 4% compared to the same period of 2017."
"Construction costs increased for the 23rd straight month in September," consultancy IHS Markit and the Procurement Executives Group (PEG) reported on Wednesday. Price increases for materials and equipment "were stronger in 9 of the 12 subcomponents in September [and lower in two] compared to last month; 11 out of 12 categories remained above the neutral threshold of 50. The biggest gain was in electrical equipment. The biggest loss was in the index for copper-based wire and cable, for which the index dropped below 50 after almost two years of recording increasing prices....Current subcontractor labor prices increased at a faster pace this month, with the index...marking the 14th straight month of increasing prices....The majority of survey respondents signaled current subcontractor labor pricing was unchanged from August, though more respondents experienced higher prices."
Construction input costs are likely to be affected in the near future by the aftermath ofHurricane Florence and by tariffs that went into effect on Monday on several thousand products from China, including hundreds of materials, parts and tools used in construction. The tariff rate is currently 10% but is scheduled to increase to 25% on January 1. How much and how soon a tariff affects the cost or availability of any item depends on whether alternative items or sources of supply are available and how quickly existing inventories are depleted. Meanwhile, flooding following the hurricane continues to disrupt road and rail transport through the Carolinas. Distributor New South Construction Supply reported on Tuesday in its monthly e-newsletter, "There were few manufacturers of construction materials we distribute that increased prices or announced future price increases in September, until President Trump announced [the latest tariffs]. The impact from Hurricane Florence slowed economic activity, especially in North and South Carolina, and will impact costs for lumber and other construction products....As has been the case for the past few months, domestic rebar prices were unchanged in September and most analysts do not expect domestic mills to increase prices in October. Most mills rollings' are sold out through mid- to late October and some mills are sold out of some of the most popular diameters until mid-November." Readers are invited to submit information on the impacts of tariffs or the hurricane to simonsonk@agc.org.
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