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The producer price index (PPI) for final demand in January, not seasonally adjusted, increased 0.6% from December and 4.9% year-over-year (y/y) from January 2018, the Bureau of Labor Statistics (BLS) reported on Thursday. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 31% of total nonresidential construction. The 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 0.7% for the month and 5.2% y/y. Increases ranged from 3.9% y/y for warehouses to 4.8% for health care buildings, 5.2% for offices and schools, and 5.8% for industrial buildings. Increases in PPIs for subcontractors' new, repair and maintenance work on nonresidential buildings ranged from 2.8% y/y for roofing contractors to 4.0% for electrical contractors, 4.8% for plumbing contractors and 6.1% for concrete contractors. The PPI for inputs to construction—excluding capital investment, labor and imports—comprises a mix of goods (56%) and services (44%). This index decreased 0.1% for the month and increased just 2.8% y/y, a steep slowdown from the 6-to-8% y/y increases that occurred in April through October 2018. The fluctuations were driven by large swings in petroleum product prices. The PPI for energy inputs to construction plunged 15% y/y after rising 17% in the previous 12 months. The PPI for nonenergy goods inputs and services inputs each rose 4.4% y/y, following increases of 3.6% and 4.1%, respectively, from January 2017 to January 2018. Inputs important to construction that had large one- or 12-month price changes include steel mill products, up 0.5% for the month and 19% y/y; asphalt felts and coatings, -0.9% and 9.4%, respectively; architectural coatings, 0.5% and 7.4%; asphalt paving mixtures and blocks, 4.8% and 6.8%; truck transportation of freight, 0.3% and 6.5%; insulation materials, 1.7% and 6.4%; aluminum mill shapes, 0.5% and 6.1%; construction machinery and equipment, 1.0% and 6.1%; lumber and plywood, -1.2% and -6.1%; copper and brass mill shapes, -1.5% and -12%; and diesel fuel, -15% and -13%. On Tuesday, BLS updated the "relative weights" for the hundreds of inputs that comprise each PPI for inputs to different types construction.
There were 382,000 job openings in construction at the end of December, more than double the year-earlier total of 149,000, and the highest total for any month in the series' 18-year history, the Bureau of Labor Statistics (BLS) reported on Tuesday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. (December usually has one of the lowest monthly totals for job openings.) Contractors hired 219,000 employees in December, not seasonally adjusted, up from 177,000 a year earlier. Together, the hires and openings figures imply that demand for workers is growing but is becoming harder to satisfy; contractors would theoretically have hired more than twice as many workers as they were able to in December. These data are consistent with the AGC of America-Sage Hiring and Business Outlook Survey, released on January 2, in which 79% of respondents reported they expect their firms to add employees in 2019 but 78% reported difficulty filling positions. The JOLTS report showed 2.2% of construction employees quit in December, the highest quit rate since 2005, which is consistent with a market in which workers can easily find another job.
Brookings Institution senior fellow William Frey posted an analysis on January 31 that found "Recently released migration data from the U.S. Census Bureau's 5-year American Community Survey identify major metropolitan areas that attract age groups dominated by millennials and baby boomers for the period 2012-2017 compared to earlier periods. They show that the top regional magnets for young adults (ages 25-34) do not overlap with those that are attracting seniors (ages 55 and older) and for both groups, the recent magnets differ from those prior to the Great Recession." These patterns show that contractors interested in finding workers or seeking projects tied to a certain age bracket (e.g., schools or senior housing) should go beyond total population changes by metro. The article includes maps and tables that "display the major metropolitan areas with the highest and lowest annual net migration from elsewhere in the U.S. over the 2012-2017 period" for both age groups. A "feature of young adult migration magnets is their location in the South and West 'Sun Belt' region where all except three [Minneapolis-St. Paul, Columbus, and Kansas City] of the top 20 magnets are located....senior migrant gainers in 2012-2017 were heavily represented in the Sun Belt, although...none of the top five senior magnets overlapped with top five young adult magnets. In fact, several metros that gained young adult migrants—such as Seattle and San Francisco—registered a net out-migration of seniors." The top metros for senior migration were Phoenix; Tampa; Riverside, Calif.; Las Vegas and Jacksonville, Fla. "New York and Los Angeles showed the greatest senior migration losses."
There were mixed signals about building construction trends recently. On Wednesday, Google announced "over $13 billion in investments throughout 2019 in data centers and offices across the U.S., with major expansions in 14 states. These new investments will give us the capacity to hire tens of thousands of employees, and enable the creation of more than 10,000 new construction jobs in Nebraska, Nevada, Ohio, Texas, Oklahoma, South Carolina and Virginia." But Amazon canceled plans to add 25,000 employees in New York City; GE reduced its planned headcount in Boston from 800 to 250 and said it would sell its new headquarters (while staying in the city); and BB&T announced it would acquire SunTrust Bank and move SunTrust's headquarters out of Atlanta.
Data DIGest is a weekly summary of economic news. All rights reserved. Sign up at http://store.agc.org. Editor: Ken Simonson, Chief Economist, AGC, simonsonk@agc.org
