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AGC's Data DIGest July 16 - 19, 2013

Most states add jobs in past year; nonres, multifamily starts tumble, say Reed, Census

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.

View the state employment data by rank, by state and by change from peak.  In June, seasonally adjusted nonfarm payroll employment increased from a year earlier in 37 states, decreased in 12 states and the District of Columbia and was unchanged in Arkansas, the Bureau of Labor Statistics (BLS) reported on Thursday. Seasonally adjusted construction employment climbed in 36 states and fell in 14 states and D.C., an AGC analysis showed. The largest one-year percentage gains in construction jobs occurred in Wyoming (10.4%, 2,200 jobs), Louisiana (9.7%, 12,200) and Arizona (9.7%, 11,100). California added the most new construction jobs over the past 12 months (32,200, 5.5%), followed by Texas (31,400, 5.4%), Florida (12,200, 3.6%) and Louisiana. South Dakota lost the highest percentage (-6.2%, -1,300 jobs), followed by Kentucky (-5.2%, -3,500) and Indiana (-5.1%, -6,400). Indiana lost the most jobs, followed by Ohio (-3,900, -2.2%), Pennsylvania (-3,500, -1.6%) and Kentucky. From May to June, seasonally adjusted construction employment rose in 23 states and D.C., declined in 24 states and was unchanged in Alaska, New Hampshire and Oklahoma. Louisiana and North Dakota set new construction employment records while all other states remained below pre-recession peaks by anywhere from 5% (Oklahoma) to 64% (Nevada). (BLS combines mining and logging with construction in D.C., South Dakota and five other states to avoid disclosing data about industries with few employers.)

The value of nonresidential construction starts in June slumped 20% from June 2012, Reed Construction Data reported on July 15, based on data it collected. Year-to-date starts for January through June combined were down 22% from the same period in 2012, with nonresidential building starts falling 14% and heavy engineering starts plunging 33%. Commercial building starts were down 6.6% over that span, although the largest components were up: retail by 5.7% and private office by 2.9%. Institutional building starts were down 20%, with the school/college component dropping 28% and hospitals/clinics down 6.5%. The largest heavy engineering categories, road/highway and water/sewage, each fell 26%.

Seasonally adjusted housing starts in June tumbled 9.9% from May, but rose 10% from June 2012, the Census Bureau reported Wednesday. Single-family starts slipped 0.8% for the month, but rose 12% year-over-year, while starts of multifamily buildings (5+ units) fell 27% in June, but climbed 7.8% from a year ago. Building permits, over time a reliable indicator of near-term future starts, sank 7.5% for the month and rose 16% year-over-year, with single-family permits rising 0.6% and 25%, respectively, while multifamily permits dropped 23% in June and inched up 0.4% over 12 months.

Although the data are subject to large revisions, it is possible that builders are growing wary. Apartment “landlords increased rents an average of 0.7% [in the second quarter], well below the 1.3% rise achieved a year earlier,” the Wall Street Journal reported on July 8, citing data from Reis Inc. “The vacancy rate, meanwhile, held steady at 4.3% in the second quarter, unchanged from the first quarter and marking the first time the rate didn’t decline since early 2010….Developers are expected to complete the construction of 160,000 new apartment units in the top 54 metropolitan areas this year, more than double the amount added to the market last year, according to CoStar Group. A further 350,000 could be finished by 2015.” Citing MPF Research, the Journal reported on Wednesday, “San Francisco’s vacancy rate for multifamily housing in the second quarter stood at 3%, the same as a year earlier, compared with a national average of 4.7%....The tight supplies have unleashed a torrent of new construction in the Bay Area with 14,377 units permitted for construction over the next 18 months.” MPF reported year-over-year rent increases of 7.8% in San Francisco, 6.9% in Oakland and 6.1% in Denver.

Informal soundings of businesses in the 12 Federal Reserve districts suggest “overall economic activity continued to increase at a modest to moderate pace” from late May to July 7, the Fed reported on Wednesday in the latest Beige Book, so named for the color of its cover. “Strong demand in residential construction continued to stimulate the manufacturing sector in several districts. Home-building suppliers in the Philadelphia and Cleveland districts reported strong activity. Wood product manufacturers expanded operations and increased production in the St. Louis and San Francisco districts. A cement producer in the Dallas district saw a very strong market. Demand for construction equipment picked up in the Chicago district….Residential construction activity also improved moderately across the districts, and contacts in New York, Philadelphia, Chicago, Minneapolis, Dallas and San Francisco reported faster growth in multi-family construction, in particular…. Nonresidential construction activity was stable or increased throughout the nation. Philadelphia, Atlanta and Richmond reported that commercial construction was flat to slightly up, while Cleveland, Chicago, St. Louis, Minneapolis and Dallas noted improvements in commercial construction….Overall consumer and input price pressures remained stable or modest in most reporting districts, although some districts noted price increases. Most notably, the Cleveland, Atlanta, Chicago, Minneapolis and San Francisco districts noted upward pressures on the prices of construction materials.

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.

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