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.
Seasonally adjusted construction employment rose from February 2018 to February 2019 in 37states and declined in 13 states and the District of Columbia, an AGC analysis of Bureau of Labor Statistics data released today showed. Texas added the most construction jobs (22,700 jobs, 3.1%), followed by Florida (22,400, 4.2%), Arizona (16,500, 10.7%) and West Virginia (16,000, 46%). West Virginia again added the highest percentage of construction jobs, followed by Nevada (12%, 10,200 jobs), Alaska (11%, 1,700) and Arizona. Construction employment set record highs in Oregon and Pennsylvania. Louisiana shed the most construction jobs (-5,500, -3.7%), followed by South Carolina (-3,800, -3.6%) and Missouri (-3,000, -2.4%). Maine had the steepest decline (-6.8%, -2,000 jobs), followed by Vermont (-5.8%, -900) and Louisiana. Construction employment rose from January to February in 16 states, fell in 33 states and D.C. and was unchanged in Vermont. (AGC's rankings are based on seasonally adjusted data, which in D.C., Hawaii and Delaware is available only for construction, mining and logging combined.)
The value of "new construction starts in February dropped 3% from the previous month" at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Thursday. "During the first two months of 2019, total construction starts on an unadjusted basis were...down 12% from the same period a year ago...On a 12-month moving total basis, total construction starts for the 12 months ending February 2019 were able to remain essentially even with the corresponding amount for the 12 months ending February 2018," with residential starts up 2%, nonresidential building starts unchanged andnonbuilding starts down 5%. Chief economist Robert Murray commented, "'The pace of construction starts has been lackluster in early 2019...The public works sector has retreated, likely affected by harsh winter weather conditions and the fact that fiscal 2019 federal appropriations for several programs were not finalized until mid-February. With funding levels now set, including a 2% increase for the federal-aid highway program, it's expected that public works will show improvement in coming months. For residential building, single-family housing remains sluggish, as affordability constraints continue to dampen demand even as mortgage rates have settled back, while a more cautious lending stance by banks may now be starting to restrain multifamily development....market fundamentals for warehouses and office buildings remain supportive for construction, and the large amount of funding coming from state bond measures passed in recent years should contribute to healthy levels of construction activity for such institutional project types as school construction.'"
Construction data firm ConstructConnect reported on March 12 that the value of starts in February 2019 declined 14% from February 2018. Nonresidential building starts fell 23% (commercial construction, -42%; institutional, -10%; and industrial, 35%). Residential starts decreased 17% (single-family, -15%, and apartments, -22%) and heavy engineering (civil) gained 14%. The value of starts in the latest 12 months combined slipped 4.5% from the February 2017-February 2018 period, with nonresidential starts down 0.1% and residential starts down 11%.
Construction consultancy FMI reported results on Thursday from "100 responses [collected at the end of 2018] from best-in-class companies that are active in AGC's Surety Bonding and Construction Risk Management Forum." Respondents were asked to choose the top three risks out of a list of 10. The largest share (80%) listed "limited supply of skilled/craftworkers," followed by "limited supply of experienced field supervisors" (44% of respondents), "changes in contract language/insurance (33%) and "tighter project schedules" (30%). Responding firms included general contractors (66%), construction managers (26%) and specialty contractors (8%).
The U.S. Chamber/USG quarterly Commercial Construction Index, released on March 14, "fell three points to the lowest level since the survey began" in the first quarter (Q1) of 2017. "In Q1 2019, all three key drivers of confidence—backlog, confidence in new business and anticipated revenue—declined for the first time in the survey's history. Confidence in new business suffered the largest drop (five points), but this may be due to concerns about the overall health of the economy and the federal government shutdown. Overall, the sector remains healthy, with more modest drops in backlog (three points) and revenue (two points). In fact, the backlog score...matched or exceeded most quarters in 2017 and the first half of 2018....Market trends for Q1 2019 are widely consistent with those reported last quarter, with steady concerns about finding skilled workers, and increased caution about investing in equipment. However, anxiety about the impact of material cost fluctuations dropped notably, suggesting that these concerns may be easing somewhat." The online survey was conducted January 10-22 by Dodge, using "a panel of more than 2,700 decision makers that includes general contractors, construction managers, design-builders and trade contractors."
The Architecture Billings Index (ABI) exceeded the breakeven 50 mark for the 25th month in a row in February, with a seasonally adjusted score of 50.3, down from 55.3 in January, the American Institute of Architects reported on Thursday. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings; scores over 50, on a 0-100 scale, suggest billings increased overall. Scores (based on three-month moving averages) for three practice specialties have remained above 50 since the second half of 2016: commercial/industrial, 53.9, up from 51.8 in January; residential (mainly multifamily), 51.5, up from 51.1; and institutional, 50.9, down from 51.5.