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AGC's Data DIGest: December 14-18, 2020

Construction employment trails February peak in 35 states; Dodge, ABI imply further decline in work

Seasonally adjusted construction employment in November trailed pre-pandemic February levels in 35 states and exceeded them in 15 states and the District of Columbia, according to AGC’s analysis of Bureau of Labor Statistics (BLS) data posted today. New York lost the most construction jobs between February and November (-39,700, -9.7%), followed by Texas (37,200, -4.7%) and California (-35,700, -4.0%). Vermont had the largest percentage loss (-24%, -3,600 jobs), followed by North Dakota (-14%, -4,100). Virginia added the most construction jobs over that span (11,800, 5.8%), followed by Utah (5,800, 5.1%) and Missouri (5,400, 4.1%). Virginia and Utah also posted the largest percentage gains, followed by Alabama (4.9%, 4,600 jobs). Construction employment decreased from October to November in 17 states, increased in 31 states and D.C., and was unchanged in Maine and Nebraska. California had the largest job loss for the month (-5,800 jobs, -0.7%), followed by New Jersey (-3,800, -2.5%) and Nevada (-3,700, -3.9%). Nevada had the largest percentage decrease, followed by South Dakota (-3.8%, -1,000) and Kentucky (-3.8%, -3,200). Texas added the most construction jobs over the month (7,500, 1.0%), followed by Pennsylvania (4,300, 1.7%) and Maryland (4,100, 2.4%). Delaware had the largest percentage gain for the month (3.8%, 800 jobs), followed by Utah (2.6%, 3,000) and Indiana (2.5%, 3,700). (BLS reports combined totals for mining, logging and construction in D.C., Delaware and Hawaii.)

“Weakness in residential and nonbuilding activity overwhelmed nonresidential building strength,” Dodge Data & Analytics reported on Wednesday. Total starts (dollars) fell 2% from October to November at a seasonally adjusted annual rate, “following a strong gain in October. Residential starts fell 7% during the month, while nonbuilding starts dropped 14%. Nonresidential building construction starts, however, rose 19% in November….Through the first 11 months of the year, total nonbuilding starts were down 16% from the same period in 2019. Starts in the highway and bridge category were up 7%, while environmental public works were 6% lower. The miscellaneous nonbuilding category was down 31% on a year-to-date basis, while utility/gas plant category was 45% lower. [Year-to-date] nonresidential building starts were down 25%. Commercial starts were 26% lower, while institutional starts were down 15%, and manufacturing starts were 63% lower. [Year-to-date] residential construction starts were 3% higher,” with single-family starts up 10% and multifamily starts down 13%.

The Architecture Billings Index (ABI) dipped to a seasonally adjusted level of 46.3 in November from 47.5 in October, the American Institute of Architects reported on Wednesday. AIA says, “The ABI serves as a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.” The ABI is derived from the share of responding architecture firms that report a gain in billings over the previous month less the share reporting a decline in billings, presented on a 0-to-100 scale. Any score below 50 means that firms with decreased billings outnumbered firms with increased billings. An index of the value of new signed design contracts slipped to 48.6 from 51.7 in October, which was its only reading above 50 since February. ABI scores by practice specialty (based on three-month moving averages) varied: residential (mostly multifamily), 52.2 (the fourth month in a row above 50 but down from 53.8 in October); mixed practice, 49.5 (down from 51.1); commercial/industrial, 47.5 (down from 48.2); and institutional, 41.9 (up slightly from 41.6). AIA reported, “Overall, firms are modestly optimistic about 2021—while just 7% expect that 2021 will be a great year for their firm, 39% expect that it will be a good year, and 25% predict a so-so year. However, 25% anticipate a challenging year, while 4% are worried that 2021 will be a potentially disastrous year for their firm.”

Housing starts (units) increased 1.2% at a seasonally adjusted annual rate from October to November and 13% year-over-year (y/y) from November 2019, the Census Bureau reported on Thursday. Multifamily (five or more units) starts climbed 8.0% for the month but tumbled 16% y/y. Single-family starts rose 0.4% and 27%, respectively. For the first 11 months of 2020 combined, starts rose 7.0% from the same period in 2019, with single-family starts up 10% and multifamily starts up 0.1%. Residential permits increased 6.2% from October and 8.5% y/y, with single-family permits up 1.3% and 22%, respectively, and multifamily permits up 23% for the month but down 17% y/y. Year-to-date permits rose 4.1%, with single-family up 12% and multifamily down 11%.

From March 2019 to March 2020 “a smaller share of Americans changed residence than in any year since 1947, when the Census Bureau first started collecting annual migration statistics,” Brookings Institution demographer William Frey wrote in an analysis posted on Tuesday. Migration generates demand for construction beyond an increase in population that remains in place. “While no comparable migration statistics are available for the 10 months since the pandemic occurred, there now appears to be a new mix of migration patterns across different parts of the country, as evidenced by real estate, moving, and survey data suggesting selective migration upticks and downticks due to both safety and economic concerns. Still, newly released pre-pandemic census statistics show a continuation of the decades-long migration decline, bringing the percentage of Americans who changed residence to a post-World War II low of 9.3%. This one-year rate occurred on the heels of a year [July 2018-July 2019] when the nation’s total population growth fell to a 100-year low, with a continued downturn in the nation’s foreign-born population gains. Thus, even before the pandemic, the nation was in the throes of stagnating demographic dynamics.” Census will issue U.S. and state population estimates as of July 2020 on Tuesday, December 22.

The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at www.agc.org/datadigest.