Nonfarm payroll construction employment, seasonally adjusted, increased in October by 27,000 to a total of 7,360,000, the Bureau of Labor Statistics reported on Friday. However, the total was down by 179,000 (-2.4%) year-over-year (y/y) and down by 279,000 (-3.7%) from the pre-pandemic peak in February. There was a gain of 15,400 last month in residential construction employment, comprising residential building (1,300) and residential specialty trade contractors (14,100). There was an increase of 11,900 in nonresidential construction employment, covering nonresidential building (3,600), specialty trades (-1,200), and heavy and civil engineering construction (9,500). There were similar employment declines between February and April in residential construction (-15%) and nonresidential construction by (-13%) but a growing disparity since then. From April to November residential construction increased 17% and recovered 96% of the employment lost from February to April. Nonresidential employment increased 9.0% and recouped only 58% of lost jobs. The industry’s unemployment rate in November was 7.3%, not seasonally adjusted, with 732,000 former construction workers idled, compared with 4.4% and 428,000 workers, respectively, in October 2019.
Contractor readers are invited to complete the 2021 AGC of America/Sage Hiring and Business Outlook Survey by Friday, December 11. Results will be reported in early January.
The Dodge Momentum Index fell 2.6% in October from the revised September reading, Dodge Data & Analytics reported on Monday. 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 institutional component of the Momentum Index fell 4.4%, while the commercial component lost 1.6%.” The total index was 13% below its pre-pandemic peak in February. Compared to November 2019, the index declined 15% (commercial, -10%; institutional, -22%).
“Economic activity in the services sector grew in November for the sixth month in a row,” the Institute for Supply Management reported on Thursday in the latest Services ISM Report On Business, a monthly survey of purchasing executives. Among 18 surveyed sectors, construction was one of 15 that reported paying higher prices for materials and services in November, 14 each that reported growth in business activity and slower supplier deliveries, 13 that reported growth in new orders, eight that reported an increase in employment and seven that reported an increase in order backlogs. Items relevant to construction that were reported in short supply included construction contractors and subcontractors, personal protective equipment (PPE), and PVC products. PPE was reported both up and down in price. PVC products were reported up in price, as were construction contractors, lumber products, and steel. Diesel fuel was reported down in price. However, the Energy Information Administration reported on Monday that on-highway diesel prices rose for the fifth week in a row, to an average of $2.53 per gallon, $0.15 more than on November 2 but down $0.52 (-17%) from a year ago.
The Federal Reserve reported on Wednesday in the latest “Beige Book,” a compilation of informal soundings of business conditions conducted October 10-November 20 in the 12 Fed districts, “Most Federal Reserve districts have characterized economic expansion as modest or moderate since the prior Beige Book period. However, four districts described little or no growth, and five narratives noted that activity remained below pre-pandemic levels for at least some sectors.” Districts are referenced by their headquarters cities. AGC compiled construction-related comments from each district, including these. Boston: Construction activity in the industrial market was somewhat restrained by increased construction costs. In the life-science sector, one contact reported that around 5 million square feet of lab space is underway to be delivered by the end of 2025 in greater Boston. New York: considerably more [construction] businesses plan to reduce than expand employment….New construction activity has remained sluggish and well below year-earlier levels….multifamily construction has remained sluggish, and commercial construction has been particularly depressed. Contacts in real estate and construction expressed increasing concern about the near-term outlook. Philadelphia’s commercial construction activity held steady at about 13% below the level of activity anticipated before the pandemic. The existing pipeline of construction should keep activity steady through the first half of 2021. Cleveland: recruitment was still a challenge for many [construction firms. Construction] firms reported rising freight rates and materials prices, along with supply chain interruptions, that contributed to higher input costs. Many of those firms were able to push such cost increases though to their customers. Minneapolis: A survey of district construction firms in late October found that firms were hiring overall, particularly in skilled trades. However, hiring sentiment for the coming months was somewhat softer. Wage pressures were moderate and appeared to be increasing for some. Certain sectors like construction were seeing greater wage pressures.
The National Association of Home Builders reported on November 24, “According to NAHB analysis of quarterly Census data, the market share of rental units of total multifamily construction starts remained at 96% during the third quarter of 2020. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period. During the third quarter of 2020, there were only 4,000 condo multifamily units that started construction. There were 103,000 rental apartment starts. Condo construction has been weak since the end of the Great Recession.”
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.
