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Inflation-adjusted gross domestic product (real GDP) increased 3.2% at a seasonally adjusted annual rate in the first quarter (Q1) of 2019, following a 2.2% gain in Q4 2018, the Bureau of Economic Analysis (BEA) reported on Friday. There were contrasting results for private and public structures investment. Real gross private domestic investment in nonresidential structures (including wells and mines) declined 0.8% (vs. -3.9% in Q4). Real investment in commercial and health care structures increased 6.8% (vs. -6.9%); manufacturing structures, -7.1% (vs. 2.1%); power and communication structures, -6.3% (vs. -14%); and other non-mining structures, -2.8% (vs. 6.9%). Real residential investment declined 4.7% (vs. -2.9%). Real investment in single-family structures plunged 19% (vs. -17%), while multifamily structures soared 18% (vs. 20%). Real government gross investment in structures jumped 22% (vs. -11%). Federal investment climbed 22% (29% for defense structures and 20% for nondefense structures); state and local investment also increased 22%. The GDP price index increased 0.9% (vs. 1.7% in Q4). The price index for nonresidential structures investment climbed 2.5% (vs. 5.8%). The price index for residential investment rose 1.8% (vs. 2.6%). The price index for government investment in structures rose 1.5% (vs. 4.6%).
The Federal Highway Administration (FHWA) recently posted a Q4 2018 value for its National Highway Construction Cost Index (NHCCI), along with revised estimates for Q2 and Q3. Prices decelerated to 1.5% in Q4 from 5.3% in Q3. But the full-year increase for 2018 was 12.7%--the largest four-quarter change since 2008 and far above the 0.5% increase a year earlier. According to FHWA, the NHCCI "is a quarterly price index intended to measure the average changes in the prices of highway construction costs over time and to convert current-dollar highway construction expenditures to real-dollar expenditures. The 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 and arrive[s] at an average cost index for all highway construction."
"Construction costs continued to increase in April for the 30th consecutive month," IHS Markit and the Procurement Executives Group reported on Wednesday. "The materials and equipment price index fell...with labor indexes also taking a step back in April but both remain firmly in positive territory, indicating continued price increases. Survey respondents reported falling prices for carbon steel pipe; all other categories ranging from turbines to transportation registered price increases. The index for fabricated structural steel climbed into positive territory, indicating more reports of price increases than decreases, for the first time since November. 'Fabricated structural steel prices picked up late in the first quarter due to higher raw materials costs and a seasonal pick-up in demand,' said Amanda Eglinton, principal economist, pricing and purchasing, IHS Markit. 'Steel input costs will decline over the near-term, however rising labor costs and supportive demand will limit declines in prices until later in the year.'...In the survey comments, respondents indicated a tight labor market for all skilled trade workers."
The Construction Labor Research Council recently issued its annual Union Labor Costs in Construction (formerly, Trends and Outlook), presenting information on compensation for union craft workers in the nation, nine geographic regions and 18 crafts. "The total package includes all negotiated employer payments contained in the wage sheet (e.g., wages, health and welfare, retirement, apprenticeship, industry advancement." The U.S. average for the total package in 2018 was $55.17, of which wages constituted 61%; retirement, 19%; health and welfare, 15%; and other, 5%. By region, the average total package ranged from $39.67 in the Southeast to $66.61 in the Southwest Pacific. By craft, total package rates ranged from $42.56 for roofers to $70.44 for plumbers. "The first year of new settlements reached in 2018...had an average increase of 3.0%," which continued a gradual, steady rise since the 1.7% average increase in 2010 and 2011. The average for all increases in 2018, including those negotiated before 2018, was 2.8%. "CLRC projects an increase to 3.0%" by 2020 in the all-increase average. The report notes, "The first year of settlements is useful for understanding current trends. The all settlements data is better for summarizing the total amount actually paid". By comparison, on March 19 the Bureau of Labor Statistics reported in its Q4 2018 Employers Costs for Employee Compensation survey that total compensation (including items not covered by CLRC) for all construction industry employees (union and nonunion) totaled $39.19 per hour. Wages and salaries made up 69%; legally required benefits (social security, Medicare, federal and state unemployment insurance, and workers' compensation), 10%; insurance (life, health, short- and long-term disability), 8%; retirement and savings, 5%; paid leave, 4%; and supplemental pay, 3%.
"Over the last three years, around 3 million Americans over 55 joined or rejoined the workforce, federal data show," Reuters reported on Wednesday. "The addition of these older workers not only contributed to economic growth, experts say, but helped stop a national decline in the share of adults working or looking for work. The trend may have run its course. After adding 5 million new and returning workers of all ages from 2016 to 2018, the U.S. labor force shrank during the first three months of this year. [Companies] are taking longer to hire as they struggle to find workers; some have delayed projects, others have become more willing to hire ex-convicts and less experienced workers bypassed when labor markets were looser, local officials say. Blue-collar workers are putting in more hours, data show, while overall labor productivity is increasing."
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