A Sustainable Workforce Starts With You

AGC's Data DIGest: September 16-21, 2015

36 states, D.C. add construction jobs in last year; multifamily, hotel markets remain hot

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 in 36 states and the District of Columbia from August 2014 to August 2015, declined in 13 states and held steady in North Dakota, an AGC analysis of Bureau of Labor Statistics (BLS) data released today showed. The number of places with year-over-year gains was the smallest since April 2012. California again gained the most construction jobs (43,800 jobs, 6.5%), followed by Florida (25,700, 6.4%), North Carolina (13,200, 7.4%), Washington (12,800, 8.0%) and Texas (11,400, 1.7%). The highest percentage of new construction jobs were again added by Arkansas (14%, 6,200) and Idaho (10%, 3,600), followed by South Carolina (9.1%, 7,500) and Iowa (8.9%, 6,700). The steepest percentage losses again occurred in West Virginia (-15%, -5,100) and Rhode Island (-7.9%, -1,300), followed by Mississippi (-7.4%, -3,600), Ohio (-5.7%, -11,300) and New Mexico (-5.2%, -2,200). Ohio and West Virginia again had the largest losses, followed by Mississippi, Indiana (-3,600, -2.9%) and Louisiana (-3,500, -2.4%). For the month, there were gains in 25 states, losses in 24 and D.C., and no change in Louisiana. (BLS combines mining and logging with construction in D.C. and six states to avoid disclosing data about industries with few employers.)

Housing starts increased 17% from August 2014 to August 2015 and 11% year-to-date (YTD), the Census Bureau reported on Thursday. Single-family starts rose 15% year-over-year and 11% YTD. Multifamily (buildings with 5 or more units) starts jumped 25% year-over-year and 13% YTD. Building permits, a fairly reliable predictor over time of near-term starts, especially single-family, increased 12.5% year-over-year and 14% YTD overall, with single-family permits rising 8.7% and 9.0%, respectively, and multifamily up 22% for both time periods. Multifamily permits YTD (300,000) far exceed starts (252,000), suggesting more projects may begin soon. Single-family permits YTD (470,000) virtually match starts (484,000).

"Two of the largest U.S. home builders [Toll Brothers Inc. and Lennar Corp.] are redoubling their push into the rental-apartment market, despite concerns the red-hot segment is getting overbuilt," the Wall Street Journal reported on Wednesday. One "factor boosting rentership: The percentage of people 18 to 34 years of age who are doubled up , meaning they are living with an adult other than a spouse, increased to 48% this year from 44% in 2007, according to the Pew Research Center. This suggests many are living with parents, other relatives or roommates and might soon opt for their own rental. [But] Ryan Severino, a senior economist at [market-research firm Reis Inc.], notes that developers in 79 markets built 173,000 apartment units last year, an anticipated 220,000 this year and 190,000 next, whereas the long-term annual average is 120,000. He added that the average vacancy rate hasn't changed much in the past two years, which he interprets as a sign that it is poised to rise." One type of site that is attracting apartment construction is suburban office parks. In "Minnetonka, Minn., a suburb of Minneapolis,...Roers Investments LLC and CPM Cos. want to demolish two vacant warehouses to build a 274-unit luxury-apartment project in the middle of the 600-acres Opus II Business Park," the Journal reported on September 9. "Jamie Danburg, president of Boca Raton, Fla.-based Danburg Management Corp....is developing a 282-unit luxury-apartment project within the Park at Broken Sound, a 700-acre corporate park in Boca Raton."

Hotel construction remains hot. Responding to a recent email inquiry, AGC chapter executives reported "more than a dozen hotel projects in downtown" Seattle; "10 different new hotel sites (including boutique) currently under consideration, approved and in permit, or proposed and expected to move forward" in West Palm Beach, Fla.; nine "hotels in various stages of development or construction within a mile" radius in Kansas City, Mo.; six "spread over a year" in Louisville, Ky.; "five hotels currently under construction in the downtown area" of Boise, Idaho; and "10 hotel projects—new construction, historic building conversions and complete remodels—either planned or already underway" around Portland, Ore., according to a January 23 article in the Portland Business Journal. But Fitch Ratings "cites four markets, including its hometown of New York City, that should be watched for potential oversupply," GlobeSt.com reports today. "Along with New York, which has by far the largest number of rooms under construction, other development hot spots include Houston, Seattle and Miami."

"The fatal injury rate for workers in the private construction industry was 9.5 per 100,000 [full-time equivalent (FTE)] workers in 2014 and 9.7 per 100,000 FTE workers in 2013," the Bureau of Labor Statistics reported on Thursday. "Construction fatalities rose to 874 in 2014 from 828 in 2013. The number of fatal work injuries in construction in 2014 was the highest reported total since 2008" although the fatal injury rate dipped because construction employment and hours increased from 2013 to 2014. "Heavy and civil engineering construction recorded a series low of 138 fatal injuries in 2014, down from 165 in 2013." BLS noted revised data would be released in late spring 2016 and that over the past five years, the preliminary count of fatalities for all sectors has increased by 2-6%. The 2013 count for construction rose from 796 to 828 (4%).

Total revenue of architectural and related services firms increased 5.7%, not seasonally adjusted from the second quarter of 2014 to the second quarter of 2015 and 9.9% YTD for the first two quarters combined, Census reported in the Quarterly Services Survey it released on September 9. Total revenue of engineering services firms declined 3.9% and 0.9%, respectively.

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.