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AGC's Data DIGest: June 25-July 6, 2018

Construction employment rises strongly in past year; spending increases through May

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Nonfarm payroll employment in June increased by 213,000, seasonally adjusted, from May and by 2,374,000 (1.6%) year-over-year (y/y), the Bureau of Labor Statistics (BLS) reported today. Theunemployment rate edged up to 4.0% from 3.8% in May. Construction employment rose by 13,000 for the month and 282,000 (4.1%) y/y to 7,222,000 (the most since May 2008 but 7% below the June 2006 peak). Average hourly earnings in construction rose 2.9% y/y to $29.71, or 10% more than the private-sector average ($26.98, up 2.7% y/y). The unemployment rate in construction, not seasonally adjusted, held nearly steady at 4.7%, compared to 4.5% in June 2017 and 4.6% in June 2016. (Not-seasonally-adjusted data may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.)

Construction employment, not seasonally adjusted, rose from May 2017 to May 2018 in 263 (73%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, fell in 47 (13%) and was unchanged in 48, according to an AGC analysis released on June 26. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) Two metro areas set new lows for May; 63 areas achieved record May highs, in series that date to 2000 for most metros. The largest percentage gains were in Midland, Texas (29%, 7,800 combined jobs) and Merced, Calif. (29%, 700 combined jobs). The most jobs were again added in the Dallas-Plano-Irving division (14,200 combined jobs, 10%), followed by Phoenix-Mesa-Scottsdale (11,500 construction jobs, 10%) and Houston-The Woodlands-Sugar Land (11,400 construction jobs, 5%). The largest percentage loss again was in Bloomington, Ill. (-14%, -500 combined jobs), followed by Columbia, S.C. (-11%, -2,300 combined jobs). The most losses were in the Newark, N.J.-Pa. division (-3,900 combined jobs, -8%); Middlesex-Monmouth-Ocean, N.J. (-3,300 combined jobs, -8%) and Columbia.

Construction spending totaled $1.309 trillion at a seasonally adjusted annual rate in May, up 0.4% from the April rate and up 4.5% from May 2017, the Census Bureau reported on July 2. Public construction climbed 0.7% for the month and 4.7% y/y. Of the three largest public segments, highway and street construction dipped 0.2% for the month but increased 5.8% y/y; educational construction rose 0.9% for the month and 0.4% y/y; and transportation, -2.6% and 9.1%, respectively (+23% y/y for state and local airport construction and 0.6% for other public transportation—port, transit and passenger rail).Private residential spending rose 0.8% in May and 6.6% y/y. New multifamily construction gained 1.6% for the month and 4.2% y/y; new single-family construction, 0.6% and 8.2%; and residential improvements, 0.9% and 6.2%. Private nonresidential construction spending slipped 0.3% for the month but increased 1.8% y/y. Of the four largest components, power (electric power plus oil and gas pipelines and field structures) edged down 0.2% for the month and 0.7% y/y; commercial fell 0.9% in May but rose 2.0% y/y (comprising retail, -3% y/y, and warehouse, 17% y/y); manufacturing, 2.4% and -11%, respectively; and office, 1.4% and 9.7%. Census revised some data back to 2011; totals were revised up by 1.0% for 2017 and 0.5% for 2016.

Construction materials prices and backlogs continue to rise, with more increases likely as additional tariffs take effect. New South Construction Supply reported on June 26, "Domestic concrete reinforcing wire mesh mills notified their customers that they will increase prices between 11 and 18%, depending on the wire gauge, on July 2, citing the 25% surcharge foreign mills added to existing orders of wire rod and the announcement by some domestic wire rod manufacturers that they would increase prices by double digits in July. Due to high demand and limited wire rod availability, domestic mills would not allow their customers to book more than a few trucks for stock at current costs in June, so effectively they have put their customers on allocation. All mills' pricing policy is now that prices are subject to change without notice and that price is at time of shipment. Lead times have increased to as much as six weeks from some gauges of sheets and rolls and some mills...are sold out until August....For the second consecutive month manufacturers of geotextile grid erosion and drainage fabrics will increase prices in July...from 5% on woven fabrics and grids to 14% on nonwoven fabrics. [Availability] continues to be tight, primarily due to the limited supply of resins....Wholesalers of imported concrete accessories such as tie wire, anchor bolts, rod chairs, nails, bar supports, snap ties, etc., increased prices for many items by approximately 5% in June and are now quoting prices for July orders 10 to 15% higher than current prices. There is also a limited supply of some items and some wholesalers are experiencing stock outs of some of the most popular items. This situation will continue through July and into August...Domestic rebar prices were unchanged in June from May, primarily due to price of scrap steel moving 'sideways' in June. Long lead times for orders is now the norm, as domestic mills' July rollings are sold out and some August rollings are sold out already."  

"Construction costs increased for the 20th straight month in June," consultancy IHS Markit and the Procurement Executives Group (PEG) reported on June 27. "Price increases for materials and equipment were more widespread in June...Prices were up in six of the 12 categories. The indexes fell for two of the three steel categories—fabricated structural steel and carbon steel pipe—but the indexes remain elevated, indicating that steel price increases continue to be widely felt. The biggest gains were in the indexes for copper-based wire and cable, electrical equipment and ocean freight....The currentsubcontractor labor index expanded at a faster rate this month compared to last" and increased for the 11th straight month.

"The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at http://store.agc.org/.