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AGC Data DIGest: Aug. 17-25, 2022

July employment tops pre-pandemic level in 33 states; starts soar in July, ConstructConnect reports

Seasonally adjusted construction employment in July surpassed the February 2020 level in 33 states, lagged in 15 states and the District of Columbia, and was flat in Michigan and Ohio, according to AGC’s analysis of data the Bureau of Labor Statistics (BLS) posted on Friday. (February 2020 was the month in which employment peaked nationally before plunging during widespread shutdowns in March and April 2020.) Florida added the most jobs (18,200, 3.2%), followed by Utah (15,800, 13.9%) and Tennessee (15,500, 11.7%). The top percentage gains were in Utah, South Dakota (12.9%, 3,100 jobs), Idaho (12.9%, 7,100 jobs), and Tennessee. New York lost the most construction jobs (-38,800, -9.5%), followed by Pennsylvania (-10,000, -3.7%), New Jersey (-8,800, -5.4%), and Louisiana (-6,600, -4.8%). New York had the largest percentage shortfall, followed by Hawaii (-6.6%, -2,500 jobs), New Jersey, and Louisiana. For the month, 32 states added construction jobs, 16 states and D.C. lost jobs, and there was no change in Idaho and Rhode Island. California added the most construction jobs over the month (11,400, 1.3%), followed by Florida (7,700, 1.3%), Alabama (3,100, 3.1%) and Texas (3,100, 0.4%). North Dakota had the largest percentage gain (3.7%, 1,000 jobs), followed by Alabama, Wyoming (2.7%, 600) and Connecticut (2.5%, 1,500). New York lost the most construction jobs in July (-2,000, -0.5%), followed by Louisiana (-1,500, -1.1%) and Illinois (-1,400, -0.6%). The largest percentage loss was in D.C. (-3.2%, -500 jobs), followed by Louisiana and West Virginia (-0.9%, -300). (For D.C., Delaware, and Hawaii, with few mining or logging jobs, BLS posts combined totals with construction. AGC treats the totals as construction only.)

The value of construction starts in July jumped 17% year-over-year (y/y) in current dollars (i.e., not inflation-adjusted) and increased 16% year-to-date for the first seven months of 2022 compared to January-July 2021, not seasonally adjusted, data firm ConstructConnect reported on August 18. Nonresidential building starts jumped 37% year-to-date, with institutional starts up 10%, commercial starts up 5.5%, and industrial (manufacturing) starts up 320%. Heavy engineering (civil) starts climbed 18% year-to-date, with roads up 23%, water/sewage up 22%, bridges up 44%, dams/canals/marine up 17%, power infrastructure down 27%, and airports up 31%. Residential starts edged down 0.1% year-to-date, with single-family down 1.8% and apartments up 4.4%.

Housing starts (units) in July plunged 9.6% at a seasonally adjusted annual rate from the upwardly revised June rate and 8.1% y/y, the Census Bureau reported on Tuesday. Single-family starts declined for the fifth month in a row, slumping 10% for the month and 19% y/y. Multifamily (five or more units) starts also sagged 10% for the month but rose 17% y/y. Residential permits declined 1.3% from June but rose 1.1% y/y. Single-family permits slid 4.3% for the month and 12% y/y. Multifamily permits climbed 2.5% from June to July and 26% y/y. The number of authorized multifamily units that have not started jumped 47% y/y. For the time being, would-be homebuyers who have been priced out by rising sales prices or monthly mortgage costs may be adding to demand for multifamily rental property. But, while a rising backlog of unused permits frequently indicates a likely rise in near-term starts, the rapid rise in both financing costs and construction costs could cause some developers to defer or cancel projects that have yet to break ground.

“Confidence in the market for new multifamily housing was mixed in the second quarter of 2022,” the National Association of Home Builders (NAHB) reported on August 18 in releasing its latest Multifamily Market Survey. One set of results, the Multifamily Production Index (MPI), “decreased 6 points to 42 compared to the previous quarter, dragged down largely by the for-sale condo sector. The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units—apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units—apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. Two of the three components saw decreases compared to the first quarter: the component measuring low-rent units fell 4 points to 45, and the component measuring for-sale units declined 11 points to 33. Meanwhile, the component measuring market rate apartments increased by 3 points to 52.” Each component index lies on a scale from 0 to 100, where any number above 50 indicates more builders report stronger rather than weaker conditions.

While some supply-chain bottlenecks are easing, others are worsening. “U.S. importers seeking relief from bottlenecks at West Coast gateways are triggering new backups at East Coast and Gulf Coast ports, adding to strains on the country’s troubled supply chains,” the Wall Street Journal reported on August 18. “Backups of dozens of container ships have formed off ports in New York, Houston and Savannah, Ga., authorities said, even as the lineup of vessels waiting to get into the neighboring ports of Los Angeles and Long Beach has dwindled from an armada that once counted more than 100 ships….Industry executives and port officials said a surge in inbound cargo in recent months has swamped landside operations, straining storage capacity and the availability of container-handling equipment while slowing the ability of dockworkers and trucking companies to handle shipments.” Adding to the risk of further congestion, “Labor talks between West Coast dockworkers and their employers are at a standstill because of a fight between two unions over who maintains equipment at a cargo-handling terminal at the Port of Seattle, according to people familiar with the talks,” the Journal reported on August 19. Covid-induced lockdowns have lessened in China but production and transport in China and Europe are being impeded by extreme heat and drought that has forced power cuts at factories and limited barge traffic on rivers.