AGC posted a new edition of the Construction Inflation Alert, an 8-page document to help owners, public officials, and others understand what contractors are experiencing in regard to materials costs, supply-chain issues, and labor availability. The July 2022 edition—the eighth since early 2021, outlines steps owners and contractors can take to adjust to the fast-changing market conditions. Readers are invited to send information about materials costs and supply issues to ken.simonson@agc.org.
Seasonally adjusted construction employment in June topped the February 2020 level in 31 states, lagged in 18 states and the District of Columbia, and was flat in West Virginia, according to AGC’s analysis of data the Bureau of Labor Statistics posted today. (February 2020 was the month in which employment peaked nationally before plunging during widespread shutdowns in March and April 2020.) Utah added the most construction jobs since February 2020 (16,100 jobs, 14%), followed by Tennessee (15,900, 12%) and Washington (11,200, 5.0%). Utah had the largest percentage gain, followed by Idaho (13%, 7,100 jobs) and Tennessee. New York shed the most construction jobs over 28 months (-36,300 jobs, -8.9%), followed by Pennsylvania (-9,500, -3.5%) and New Jersey (-8,800, -5.4%). The largest percentage losses were in New York, North Dakota (-6.4%, -1,800 jobs), and Hawaii (-5.8%, -2,200). For the month, 25 states and D.C. added construction jobs, 23 states lost jobs, and there was no change in Hawaii and West Virginia. Pennsylvania added the most jobs (4,400 jobs, 1.7%), followed by Massachusetts (3,300, 1.9%) and North Carolina (3,000, 1.2%). The largest percentage gains were in Oregon (2.4%, 2,800 jobs), Nebraska (2.3%, 1,300) and Arkansas (2.1%, 1,100). (For D.C., Delaware, and Hawaii, with few mining or logging jobs, BLS posts combined totals with construction. AGC treats the totals as construction only.)
Total construction starts in current dollars (i.e., without adjusting for inflation) fell 5% from May to June at a seasonally adjusted annual rate but increased 5% year-to-date for the first half of 2022 compared to January-June 2021, data firm Dodge Construction Network reported on Wednesday. Residential starts decreased 6% from May. “Single-family starts dropped 7% and multifamily starts were 3% lower. Through the first six months of 2022, residential starts were 3% higher than in the first six months of 2021. Multifamily starts were up 23%, while single-family housing slipped 4%.” Nonbuilding starts jumped 13% in June “due to the start of a large solar project in Nevada and a transmission line through Utah and Wyoming” but slipped 2% year-to-date. Nonresidential building starts tumbled 14% for the month but leaped 13% year-to-date. “Commercial starts advanced 14% and institutional starts rose 1%, while manufacturing starts were 83% higher on a year-to-date basis.”
The Architecture Billings Index (ABI), which the American Institute of Architects (AIA) calls “a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months,” registered a score of 53.2 in June, down “slightly” from 53.5 in May but the 17th consecutive reading above 50, the institute reported on Wednesday. The ABI is derived from the share of responding architecture firms that report a gain in billings over the previous month less the share reporting a decline in billings, presented on a 0-to-100 scale. Any score above 50 means more firms reported increased billings than decreased billings. Scores by practice specialty (based on three-month moving averages) all topped 50: 53.5 for firms with a predominantly institutional practice (up from 52.4 in May); 52.8 for mixed-practice firms (down from 54.6); 52.6 for multifamily residential (down from 53.3); and 52.5 for commercial/industrial (down from 56.2). Indexes declined to 58.2 (from 63.9) for inquiries and 52.2 (from 56.9) for design contracts.
Housing starts (units) in June slipped 2.0% at a seasonally adjusted annual rate from the upwardly revised May rate and 6.3% y/y but increased 5.9% year-to-date, the Census Bureau reported on Tuesday. Single-family starts declined for the fourth month in a row, slumping 8.1% for the month and 16% y/y but inched up 0.2% year-to-date. Multifamily (five or more units) starts jumped 15% for the month, 16% y/y, and 20% year-to-date. Residential permits declined 0.6% from May but rose 1.4% y/y and 2.2% year-to-date. Single-family permits slid 8.0% for the month, 11% y/y, and 4.4% year-to-date. Multifamily permits soared 13% from May to June, 28% y/y, and 17% year-to-date. The number of authorized multifamily units that have not started jumped 43% y/y. For the time being, would-be homebuyers who have been priced out by rising sales prices or monthly mortgage costs may be adding to demand for multifamily rental property. But, while a rising backlog of unused permits frequently indicates a likely rise in near-term starts, the rapid rise in both financing costs and construction costs could cause some developers to defer or cancel projects that have yet to break ground.
Engineering News-Record reported in its July 11/18 issue that its Construction Industry Confidence Index (CICI) for the second quarter (Q2) “dropped 17 points below the Q1 level” to 44. The index “measures executive sentiment about where the current market will be in the next three to six months and over a 12- to 18-month period, on a 0-100 scale. A rating above 50 shows a growing market. The measure is based on responses by U.S. executives of leading general contractors, subcontractors, and design firms on ENR’s top lists to surveys sent between May 9 and June 27….Labor shortages remain endemic, with 63.5% of CICI respondents reporting they were somewhat or much worse than one year ago. Confidence is down in most markets ENR tracks.” Retail is “down 12 points to a 30 rating, with K-12 education down 10 points….Firms remain optimistic in many markets, particularly health care (71),” industrial-manufacturing (68), and distribution-warehouse (68), “even with a 10-point drop” in the latter.
