The Data DIGest: 7.7.2010

Posted by TED Magazine on Wednesday, July 07, 2010

Construction jobs shrank in June, spending fell in May despite stimulus gains

Click here for Ken Simonson’s latest PowerPoint presentation on construction activity, materials and labor.
Click here for construction employment tables for May.

    Nonfarm payroll employment shrank by 125,000, seasonally adjusted, in June as the end of 225,000 temporary Census jobs swamped modest private-sector gains, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate was 9.6%, not seasonally adjusted (9.5%, seasonally adjusted, down from 9.7% in May). Construction employment fell 22,000, seasonally adjusted, to 5,582,000, the lowest level since August 1996. The unemployment rate in construction was 20.1%, not seasonally adjusted (BLS does not adjust industry rates), the highest for any industry and the highest June rate since the series began in 1976. Of the five BLS construction sectors, only heavy and civil engineering employment increased (by 1,300 jobs or 0.2%), its third rise in four months. The increase may reflect increases in stimulus work, which is concentrated on infrastructure. There were decreases for residential building (-1,500, 0.3%) and specialty trades (-4,600, 0.3%), as well as nonresidential building (-4,300, 0.6%) and specialty trades (-13,000, 0.7%). In a hint that this dichotomy may continue, engineering and drafting services employment increased for the third straight month in May, by 2,300 or 0.3%, not seasonally adjusted, while architectural services employment slipped by 100 or 0.1%. (BLS does not adjust subsectors and issues data with a one-month lag.) Average hourly earnings for all workers in construction were unchanged in June at $25.17, seasonally adjusted, just 1.4% higher than in June 2009. Construction spending in May totaled $842 billion at a seasonally adjusted annual rate (SAAR), down 0.2% from April and 8.0% from May 2009, the Census Bureau reported on Thursday. Public construction gained 0.4% for the month and fell 2.9% year-over-year. Aside from the small conservation and development category, which may reflect levee work in New Orleans, year-over-year gains were solely in categories benefiting from stimulus funds: public transportation (mainly airport and transit), 22%; sewage and waste disposal, 5.6%; highway and street, 5.5%; and water supply, 4.0%. Construction of federal government facilities, aided by stimulus and base realignment funds, jumped 16% from a year ago. In contrast, public educational construction, which did not receive stimulus funding, shrank 17%. Private nonresidential construction slumped 0.6% for the month and 25% from May 2009, with year-over-year declines in every category, including power, -2.7%; manufacturing, -32%; commercial (retail, warehouse and farm), -31%; health care, -17%; office, -42%; and lodging, -64%. Private residential construction slipped 0.4% in May but was up 11% from May 2009. New single-family construction rose 0.8% and 31%; new multi-family plunged 6% and 57%; and improvements to existing single- and multi-family fell 0.8% for the month but rose 13% year-over-year. Census made revisions back to 2004, with monthly revisions in 2009 and 2010 averaging roughly -$25 billion (SAAR). For April the largest restatements were for manufacturing (-$14 billion or 24%), office (-$4 billion, 10%) and highway and street construction (-$3 billion, 4%). The changes reflect data from the recently released 2008 Annual Capital Expenditures Survey and other sources that showed more of a drop in nonresidential spending than previous procedures had suggested.

   “While there have been positive signs for the general economy, unfortunately, the outlook for put-in-place construction for 2010 remains bleak,” consulting firm FMI wrote in Construction Outlook: Second Quarter 2010 Report, issued on Thursday. “Total construction in 2010 will be down 5% after declining in 2009. Residential construction is expected to begin recovering in 2010. Nonresidential construction will decline 16% in 2010. Nonbuilding construction will continue to be a positive contributor thanks to the support of power and conservation and development construction.”

    Transportation manufacturing construction rose for the third month in a row in May, although it was still 57% below May 2010. In June, Toyota announced it would finish its half-completed Mississippi plant; Tesla Motors received stimulus and private funds that will enable it to overhaul a closed General Motors plant in Delaware; and Detroit Diesel Corp. said it would spend $194 million to “substantially” increase production at its plant in Redford, Michigan.

    New orders for U.S. manufactured goods (other than semiconductor manufacturing) fell 1.4% in May, seasonally adjusted, after eight consecutive monthly gains, Census reported today. Orders for construction materials and supplies fell 1.0%. Orders for construction machinery, which tend to be volatile, soared 22%.

    Unemployment rates rose from May 2009 to May 2010 in 222 out of 372 metropolitan areas, fell in 141 and remain level in nine, BLS reported on Wednesday. Nonfarm payroll employment fell in 270 areas, rose in 95 and was unchanged in seven. Of the 337 areas (including submarkets) for which construction employment data is available (combined by BLS with mining and logging in most metros to prevent disclosure of data for industries with few firms), employment fell in 294, rose in 15 and held steady in 27, AGC calculated. The largest 12-month percentage employment gains were in Eau Claire, Wisconsin, (17%, 500 jobs combined); Haverhill-North Andover-Amesbury, Massachusetts-New Hampshire (11%, 400 combined); Bismarck, North Dakota (8%, 300 combined); and Grand Forks, N.D.-Minnesota (8%, 200 combined). The largest numerical increases were in Columbus, Ohio (1,500 combined, 5%); Kansas City, Kansas (1,100 combined, 6%); and Oklahoma City (1,000 in construction alone, 4%). The largest percentage declines were in Chico, California (33%, 900 combined); Flagstaff, Arizona (32%, 700 combined; and Pascagoula, Mississippi (31%, 1,900 combined).