Construction employment, seasonally adjusted, totaled a record-high 7,777,000 in December, an increase of 28,000 from the November total and 248,000 (3.3%) year-over-year (y/y), according to AGC’s analysis of data the Bureau of Labor Statistics (BLS) posted on January 6. Residential construction employment (residential building and specialty contractors) rose by 9,500 in December and 98,300 (3.2%) y/y. Nonresidential construction employment (building, specialty trade, and heavy and civil engineering construction firms) increased by 17,900 for the month and 131,900 (3.0%) y/y. The number of unemployed jobseekers with construction experience fell by 54,000 (-11%) y/y to 443,000, and the industry’s unemployment rate declined from 5.0% to 4.4%--the lowest December figures in the 22-year history of the series. Seasonally adjusted average hourly earnings for production and nonsupervisory employees in construction (craft and office) rose 6.1% y/y to $33.15 per hour. That topped the 5.0% rise for all such private-sector employees. The “premium” for hourly construction workers rose to 18.1% over the private sector average of $28.10 but remained considerably below the average premium in 2000-2019 of 21.5%.
The value of construction starts in current dollars (i.e., not inflation-adjusted) soared 27% y/y in December and 17% for all of 2022 compared to 2021, data firm ConstructConnect reported on Wednesday. “The story of construction starts in 2022 was the proliferation of mega projects [$1 billion or more]. Many of them originated in the manufacturing sector. December offered a prime example. Three of its four ‘megas’ were production plants: a computer chipmaking facility in Arizona; and battery plants in Tennessee and Arizona….The other mega was the laying of an underground electric power cable from Canada to New York.” Nonresidential building starts jumped 71% y/y and 37% for the year, with institutional starts up 19% and 18%, respectively; industrial (manufacturing) starts up 1097% and 204%; and commercial starts down 37% y/y but up 3% for the year. Engineering (civil) starts climbed 94% y/y and 27% for the year, with roads up 15% and 24%, water/sewage up 63% and 29%, bridges up 76% and 53%, dams/marine down 2.1% y/y but up 7.7% for the year, power and miscellaneous civil up 748% and 16%, and airports up 56% and 42%. Residential starts plummeted 26% y/y and slipped 2.2% for the year, with single-family down 24% and 12%, and apartments down 30% y/y but up 21% for the year.
Announcements of gigantic factory projects have continued in January. “South Korea’s Hanwha Group plans to spend $2.5 billion to build an entire solar-manufacturing supply chain in Georgia, the biggest solar investment spurred so far by the massive tax incentives the U.S. introduced last year,” the Wall Street Journal reported on Thursday. Manufacturers have announced “more than $40 billion in investments in plants to make batteries as well as equipment for wind and solar power since the [Inflation Reduction Act] was passed, according to Journal estimates. Companies have made another $40 billion of capital-investment announcements on deploying clean energy, according to the business lobby American Clean Power…. Some energy experts caution that not all the investments that have been announced will actually be implemented, and that some may take longer than expected….Many details on how the tax credits will be implemented are still to be determined, and some investors are waiting for those before making final decisions on how much money to commit, said David Brown, an energy transition analyst at Wood Mackenzie.”
The Dodge Momentum Index rose 6.6% in December from November and 40% y/y, Dodge Construction Network reported on Monday. The index “is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.” The institutional component of the Momentum Index rose 2.7% for the month and 20% y/y. The commercial component increased 8.4% and 51%, respectively. “Commercial planning in December was supported by broad-based increases across office, warehouse, retail and hotel planning. Meanwhile, institutional growth focused on recreation and public building, with education and healthcare planning activity remaining flat.”
