A Sustainable Workforce Starts With You

AGC Data DIGest: September 6-13, 2021

Materials costs continued to outstrip bid prices in the 12 months ending in August despite a recent drop in lumber and fuel prices. The producer price index (PPI) for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of buildings—increased 0.3% from July and 5.0% year-over-year (y/y) since August 2020, while the PPI for material and service inputs to construction industries climbed 20.6% y/y despite a decline of 1.7% for the month, the Bureau of Labor Statistics (BLS) reported on Friday. The PPI for lumber and plywood plunged 17% for the month but was still 16% higher y/y. The PPI for diesel fuel slid 2.0% for the month but soared 67% y/y. Other materials continued to rise in price, with double- or even triple-digit percentage increases y/y. The PPI for steel mill products soared 5.1% for the month and 123% y/y; copper and brass mill shapes, 1.0% and 45%, respectively; aluminum mill shapes, 3.7% and 35%; plastic construction products, 3.0% and 30%; gypsum products, 0.5% and 23%; insulation materials, 4.4% and 17%; truck transportation of freight, 0.9% and 14%; asphalt felt and coatings, 3.5% and 15%; and architectural coatings, 0.5% and 10%. There were smaller but nevertheless unusually large y/y increases for flat glass, down 0.3% for the month but up 7.1% y/y; concrete products, 1.0% and 6.0%, respectively; asphalt paving mixtures and blocks, 0.6% and 5.6%; and construction machinery and equipment, 0.8% and 5.4%. Bid prices, as measured by PPIs for new buildings and subcontractors, have risen at diverse rates. PPIs rose 7.1% y/y for new warehouse building construction, 6.0% for offices, 5.0% for industrial buildings, 4.4% for health care buildings, and 3.4% for schools. PPI increases for new, repair, and maintenance work ranged from 6.9% for roofing contractors to 5.6% for concrete, 4.0% for electrical, and 3.9% for plumbing contractors. AGC posted tables and graphs of construction PPIs.

There were 321,000 job openings in construction, seasonally adjusted, at the end of July, the Bureau of Labor Statistics (BLS) reported on Monday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. Openings represented 4.2% of the open and filled positions. Both numbers were the highest in the 21-year history of the series. Construction openings increased 23,000 (7.7%) y/y. Hires totaled 384,000, very close to July totals for the past four years. Layoffs and discharges totaled 177,000, down 12,000 (-6.3%) y/y, with a layoff rate of 2.4 per 100 employed, the second-lowest July rate in series history. Quits totaled 199,000, a jump of 54,000 (37%) y/y, with a quit rate of 2.7%, the second-highest in series history. Together, the record-high openings and decline in layoffs suggest flat hiring totals reflect the difficulty contractors are experiencing in filling positions, not stagnant demand for workers. Such an interpretation is consistent with results from the 2021 Autodesk-AGC Workforce Survey that AGC posted on September 2: of 1,642 firms that employ hourly craft workers, 90% reported openings and 89% of those with openings reported difficulty filling them.

BLS on Wednesday issued its biennial projections of 10-year employment change, covering 2020-2030. The agency projects construction industry employment to increase by 315,000 or an annual average of 0.4% per year, half the growth rate for total nonfarm payroll employment of 0.8% (7.7% over 10 years). Among construction occupations, laborers are projected to have the largest 10-year numerical increase, 103,000 (8.0%). One construction occupation, solar photovoltaic installers, is listed among the 10-fastest growing, with a projected increase over the decade of 52%, but this would be an addition of only 6,100 jobs. The report also includes projections of average annual openings, taking into account projected retirements, and reasons for employment change for each occupation. For instance, BLS projects a 10-year increase of 51,400 (11.5%) for construction managers, with average annual openings totaling 38,900, due to “Demand change - share increases as technical and process improvements increase the need for construction managers to track costs, materials, and schedules.” Total employment among construction trades is projected to increase by 294,000 (5.5%) over the decade, with 558,100 openings per year.

The Dodge Momentum Index fell 3% in August from a downwardly revised July reading, Dodge Data & Analytics reported on Wednesday. The index “is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The commercial planning component lost 2% in August, while the institutional component fell by 6%....The decline in August was the third consecutive drop in the Momentum Index, which is now off 14% from the most recent high in May. Since May the commercial component is down 10% and the institutional component is 22% lower. This reversal comes as prices for materials used in nonresidential buildings increase in combination with a shortage of labor and a rising number of new COVID-19 cases from the Delta variant, all working in concert to undermine confidence in the fledgling construction recovery. There were some pockets of strength in August, however, as more data center, education and warehouse projects moved into planning relative to the prior month. Additionally, the overall level of the Momentum Index is 19% higher than one year ago; institutional planning was up 17% and commercial planning was 20% higher than last year.”

The Census Bureau on August 27 posted a notice in the Federal Register inviting comment by October 26 on forms used to conduct the Construction Progress Reporting Surveys (CPRS) and collect information on the dollar value of construction put in place. The agency does not currently plan to revise the forms. Readers who currently or formerly filled out series C-700 forms are invited to send a copy of their comments to ken.simonson@agc.org.