A Sustainable Workforce Starts With You

AGC's Data DIGest: Jan. 30-Feb. 5, 2021

Employment stagnates in January; nonresidential spending slides in December; price hikes spread

Nonfarm payroll construction employment, seasonally adjusted, slipped in January by 3,000 from a downwardly revised December total to 7,392,000, the Bureau of Labor Statistics (BLS) reported today. The January figure was down 223,000 (-2.9%) year-over-year (y/y) and down 256,000 (-3.3%) from the pre-pandemic peak in February 2020. There was a dip of 600 last month in residential construction employment, comprising residential building (up 3,900) and residential specialty trade contractors (down 4,500). There was a decline of 1,900 in nonresidential construction employment, covering nonresidential building (-600), specialty trades (-3,000), and heavy and civil engineering construction (1,500). There were similar employment declines between February and April 2020 in residential construction (-16%) and nonresidential construction (-14%) but a growing disparity since then. From April to last month, residential construction increased 19% and recovered all (101%) of the employment lost from February to April. Nonresidential employment increased 9.6% and recouped only 60% of lost jobs. The industry’s unemployment rate in January was 9.4%, not seasonally adjusted, with 938,000 former construction workers idled, the highest January figures since 2015 and up sharply from the year-earlier 5.4% rate and 515,000 workers, respectively.

Construction spending in December increased 1.0% from November and 5.7% from December 2019 to a seasonally adjusted annual rate of $1.49 trillion, the Census Bureau reported on Monday. The disparity widened between residential spending growth and flat or declining nonresidential activity. Private residential construction spending rose for the seventh month in a row, jumping 3.1% for the month and 17% from February to December, with 10-month gains of 17%, including 12% for new multifamily construction and 17% each for new single-family construction and owner-occupied improvements. Private nonresidential construction spending declined for the sixth consecutive month, by 1.7% since November and 9.9% since February. The largest private nonresidential segment (ranked by December spending)—power—slumped 9.3% over 10 months (including electric power, -14%, and oil and gas field structures and pipelines, 1.6%), followed by commercial, -4.5% (including warehouse, 1.6%, and retail, -12%); manufacturing, -17%; and office, -4.2%. Public construction spending climbed 0.5% for the month and 0.1% over 10 months. The largest public segment, highway and street construction, declined 4.8% since February. Public education construction rose 1.4% (primary/secondary, 7.3%, and higher education, -14%). Lodging had the largest 10-month decrease, -23%.

Materials cost increases and supply chain problems continue to proliferate. Reports from members this week have cited copper, vinyl siding, and “concrete, (driven by cement prices, due to COVID shutdowns), steel (metal studs, ductwork, light fixtures, heavy structural steel), gypsum, and lumber.” On Wednesday, the Institute for Supply Management released its latest Services ISM Report On Business, a monthly survey of purchasing executives. Among 18 surveyed sectors, construction was one of 16 that reported paying higher prices for materials and services in January and one of 13 that reported slower supplier deliveries. Items relevant to construction that were reported in short supply included construction contractors and labor, lumber, oriented strand board (OSB), personal protective equipment (PPE), and steel products. Items that were reported up in price include copper, diesel, interior door slabs, lumber, OSB, PPE, PVC products, rebar, steel and steel products. “Engineering and construction costs continued to rise in January, marking the third consecutive month of increases,” IHS Markit and the Procurement Executives Group reported on January 27. “Survey participants witnessed price escalations for all categories under the materials and equipment sub-index for the first time since July 2018.” Readers are invited to email information about construction costs and supply-chain issues to ken.simonson@agc.org.

Construction employment, not seasonally adjusted, decreased between December 2019 and December 2020 in 191 (53%) of the 358 metro areas (including divisions of larger metros) for which BLS posts construction employment data, increased in 134 (37%) and was unchanged in 33, according to an analysis AGC released on Wednesday. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers; AGC assumes the construction-only percentage change in these metros equals the combined change.) The largest losses occurred again in Houston-The Woodlands-Sugar Land (-24,500 construction jobs, -10%); New York City (-19,100 combined jobs, -12%); Midland, Texas (-9,200 combined jobs, -23%); and Montgomery-Bucks-Chester Counties, Pa. division (-9,100 combined jobs, -17%). The steepest percentage losses again occurred in the Brockton-Bridgewater-Easton, Mass. division (-40%, -2,100 combined jobs); Altoona, Pa. (-34%, -1,000 combined jobs); Bloomsburg-Berwick, Pa. (-33%, -400 combined jobs); Johnstown, Pa. (-29%, -700 combined jobs); and East Stroudsburg, Pa. (-29%, -500 combined jobs). Indianapolis-Carmel-Anderson, Ind. added the most construction jobs over the year (5,600 construction jobs, 10%), followed by Northern Virginia (5,300 combined jobs, 7%); Seattle-Bellevue-Everett, Wash. (4,900 construction jobs, 5%); Baltimore-Columbia-Towson, Md. (4,800 combined jobs, 6%); and Kansas City, Mo. (3,300 combined jobs, 11%). Walla Walla, Wash. had the highest percentage increase (17%, 200 combined jobs), followed by Fond du Lac, Wisc. (16%, 500 combined jobs); Springfield, Mo. (15%, 1,400 combined jobs); and Dutchess-Putnam counties, N.Y. (15%, 1,300 combined jobs).

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.