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AGC's Data DIGest: September 22-27, 2018

Construction spending grows, aside from single-family; employment rises in 70% of metros

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.

Construction spending totaled $1.299 trillion at a seasonally adjusted annual rate in April, equal to the upwardly revised March rate but down 1.2% from April 2018, the Census Bureau reported this week. The year-to-date total for January-April combined was 0.2% higher than in the same months of 2018. Public construction jumped 4.8% for the month and 12% year-to-date. Of the three largest public segments, highway and street construction soared 17% year-to-date; educational construction 9.6%; and transportation, 6.2%. Private residential spending slid 0.6% in April and 7.6% year-to-date. New multifamily construction rose 7.9% year-to-date; new single-family construction, -7.1%; and residential improvements, -13%. Private nonresidential spending declined 2.9% in April but increased 2.6% year-to-date. Of the four largest components, power gained 2.0% year-to-date (comprising electric power, -0.5%, and oil and gas pipelines and field structures, 9.6%); commercial, -6% (comprising retail, -17%, and warehouse, 6.9%); manufacturing, 11%; and office, 8.0%. 

Construction employment, not seasonally adjusted, increased between April 2018 and April 2019 in250 (70%) of the 358 metro areas (including divisions of larger metros) for which the Bureau of Labor Statistics (BLS) provides construction employment data, fell in 53 (15%) and was unchanged in 55, according to an analysis AGC released on Thursday. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The largest gains again occurred in Phoenix-Mesa-Scottsdale (16,600 construction jobs, 14%), followed by the Dallas-Plano-Irving division (9,200 combined jobs, 6%) and the Los Angeles-Long Beach-Glendale division (8,400 construction jobs, 6%). The largest percentage gain (26%) occurred in Monroe, Mich. (500 combined jobs), and St. Cloud, Minn. (1,500 combined jobs), followed by Auburn-Opelika, Ala. (25%, 600 combined jobs). The largest job loss occurred in Charlotte-Concord-Gastonia, N.C.-S.C. (-2,600 combined jobs, -4%), followed by Baton Rouge, La. (-1,800 construction jobs, -3%), and Hartford-West Hartford-East Hartford, Conn. (-1,600 jobs, -8%). The largest percentage loss (-13%) occurred in Gulfport-Biloxi-Pascagoula, Miss. (-1,200 combined jobs) and Atlantic City-Hammonton, N.J. (-800 combined jobs), followed by Niles-Benton Harbor, Mich. (-12%, -300 combined jobs). Construction employment hit a record high for April in 72 metros (dating back in most areas to 1990); one area (Danville, Ill.) set a new April low.

President Trump on Thursday announced new tariffs on all imports from Mexico (which totaled $346 billion in 2018, according to the U.S. Trade Representative's office), the Wall Street Journal reported on Friday. The tariffs will "begin at 5% and grow steadily, hitting to 25% by October 1 unless Mexico takes satisfactory action to halt" what the President called "the illegal migration crisis." The tariffs are likely to push up the cost of some construction materials and trigger retaliatory steps by Mexico that could lead U.S. export-oriented firms and transportation facilities to reduce or cancel construction projects. Readers are invited to report tariff- and trade-related impacts on construction costs, availability and demand to simonsonk@agc.org.

Despite the large increase in highway construction spending reported today by Census, some projects are being deferred or cancelled. On May 9, the Portland Press Herald reported, "The Maine Department of Transportation [(DOT)] has slashed more than $59 million in road and bridge projects from its annual work plan in an effort to stay within budget amid sharply rising construction costs. The department Thursday said it rejected a bid for paving and safety improvements on Interstate 295 through Portland and canceled 11 other planned construction projects. Last week, it rejected bids for three plans after receiving bids from contractors that were at least 40% more than what the agency had estimated the projects would cost." Regarding a project to "rebuild and expand 14 miles of I-94" in Minnesota, Finance and Commerce reported on May 23, "The $103.9 million apparent low bid...blew past [Minnesota] DOT's estimate of $75 million to $85 million for the project." Readers are invited to report project delays, reductions and cancellations to simonsonk@agc.org.

Undergraduate student enrollments in construction trades programs or majors increased at both two- and four-year degree-granting institutions from Spring 2018 to Spring 2019, the National Student Clearinghouse Research Center reported on Thursday, even as total enrollments declined for the seventh year in a row, by 1.7% (297,000 students). There were 63,000 students in construction trades at two-year schools (up 16% from 2018) and 11,000 at four-year schools (up 5.7%). Total enrollment tumbled 20% at four-year, for-profit colleges and decreased by 3.4% at two-year, public colleges and 0.9% at four-year public institutions. Enrollment climbed 3.2% at four-year, private nonprofit colleges, although several small private colleges closed or announced imminent closure this year. With shrinking numbers of high school students, a decrease in foreign students, and a strong job market, enrollments are likely to continue dropping, implying less demand for higher-education construction.

In its "Today in Energy" posting on Thursday, the Energy Information Administration (EIA) reported, "EIA recently launched a new liquids pipeline projects database that tracks more than 200 crude oil, hydrocarbon gas liquids (HGL), and petroleum products pipeline projects," including 27 announced projects and 27 under construction. "Crude oil pipeline capacity additions originating in the Gulf Coast region represent most of the scheduled pipeline capacity growth over the next few years....In the region, nine intrastate crude oil pipeline projects have been announced or are under construction with in-service dates between 2019–2021." EIA also posts a file of natural gas pipeline projects, with 40 under construction and 20 announced.

Data DIGest is a weekly summary of economic news. All rights reserved. Sign up at http://store.agc.org. Editor: Ken Simonson, Chief Economist, AGC, simonsonk@agc.org