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AGC's Data DIGest: February 6-9, 2018

Employment rose in 3 out of 4 metros in 2017; highway construction prices turn higher

Editor’s note: Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

Construction employment, not seasonally adjusted, rose from December 2016 to December 2017 in 269 (75%) of the 358 metro areas (including divisions of larger metros) for which the Bureau of Labor Statistics (BLS) provides construction employment data, fell in 52 (12%) and was unchanged in 46, according to an AGC analysis released on Tuesday. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The largest gain again occurred in Riverside-San Bernardino-Ontario, Calif. (14,300 construction jobs, 15%), followed by Las Vegas-Henderson-Paradise (10,800 construction jobs, 18%) and New York City (10,100 combined jobs, 7%). The largest percentage gains again occurred in Cheyenne, Wyo. (25%, 800 combined jobs); Wenatchee, Wash. (21%, 500 combined jobs); and Punta Gorda, Fla. (20%, 800 combined jobs); followed by Omaha-Council Bluffs, Neb.-Iowa (19%, 4,800 combined jobs) and Las Vegas-Henderson-Paradise. The largest job losses again were in Columbia, S.C. (-3,200 combined jobs, -20%) and the Kansas City, Mo. division (-2,800 combined jobs, -10%). The largest percentage losses again occurred in Grand Forks, N.D.-Minn. (-24%, -1,000 combined jobs); followed by Danville, Ill. (-20%, -100 combined jobs); Kansas City, Mo. and Columbia, S.C. Employment set a record high for December in 38 metros (dating back in most areas to December 1990); no metros set a new December low. (Because normal monthly weather- and holiday-related differences cause fluctuations in not-seasonally-adjusted levels, comparisons between totals for December and other months may not be meaningful.)

Highway construction prices appear to be rising. The National Highway Construction Cost Index increased 4.2% from March to June 2017 and 3.4% from June to September, according to data the Federal Highway Administration posted in late January. These were the highest quarterly increases since September 2014. The 3.8% increase from September 2016 to September 2017 followed a decrease of 1.6% in the previous 12 months and -1.7% in the 12 months ending in September 2015. 

The outlook for higher education construction is murky. Budget problems may hold down public college outlays. "Paltry state investment in higher education could strain the budgets of public colleges and universities this year, with small schools bearing the brunt, Moody's Investors Service said" on January 29, the Washington Post reported on January 30. "The warning arrives on the heels of a bleak report on state appropriations from the Grapevine survey conducted by Illinois State University's Center for the Study of Education Policy and the State Higher Education Executive Officers Association. Results released last week show state funding for public higher education increased by 1.6% for the fiscal year ending June 2018, the lowest annual growth in the past five years." In contrast, "Donations to U.S. colleges and universities jumped to a record $43.6 billion, thanks to last year's stock-market rally and renewed charitable activity from alumni," the Wall Street Journal reported on Tuesday. "Giving increased by 6.3% in the fiscal year that ended June 30, or 3.7% adjusted for inflation, according the Council for Aid to Education's annual Voluntary Support of Education survey, released Tuesday....The tax overhaul passed by Congress late last year may upend trends in charitable giving, including to colleges and universities. Many individuals increased their giving right before 2017 closed out, but the new law...reduces the tax incentive for making donations." Census Bureau data posted on February 1 show private higher education construction spending (unadjusted for inflation) jumped 12% in calendar 2016 to a record $13.2 billion, then fell 4% in 2017 to $12.7 billion, while state and local higher education construction spending declined 4% in both 2016 and 2017 to $23.1 billion. 

Electric power generation and transmission construction appears poised to surge (pun intended). "In 2016, investor-owned electric companies spent $20.8 billion on transmission investment, compared to $20.2 billion in 2015 [not adjusted for inflation], and were projected to spend $22.9 billion in 2017," according to the Edison Electric Institute. "Investor-owned electric companies are planning to invest approximately $91 billion on transmission construction between 2017 and 2020." The Energy Information Administration's Today in Energy blog today listed a variety of transmission projects under way in several regions. The Federal Energy Regulatory Commission's FERC Energy Infrastructure Update for December shows proposedgeneration additions over the next three years (by January 2021) of 244 gigawatts, 10 times the amount installed in 2017. Natural gas accounts for 12% of the proposed generating units and 38% of the installed capacity; wind, 8% and 33%, respectively; and solar, 59% and 19%. Investors other than utilities are also installing solar generation capacity. On Wednesday, technology infrastructure company Switch, together with investment company Capital Dynamics, announced "the construction of the single largest solar project portfolio in the United States. [The] Gigawatt 1 solar project will be built in Northern and Southern Nevada." The newsletter Data Center Knowledge reported on Thursday, "Its planned generation capacity is 1,000MW, Adam Kramer, executive VP of strategy at Switch, said. That would make it the largest solar energy project in the US. Today, that title belongs to the 580MW Solar Star station in Kern County, Calif." Census data for 2017 show private electric power construction spending put in place in 2017 totaled $67.6 billion, down 7.4% from 2016. These figures are not broken out among generation, transmission and distribution or by generation source. But state and local electric power, which totaled $4.7 billion in 2017 (down 30% from 2016), includes a subtotal for distribution of $2.3 billion (down 14%).

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