The Data DIGest: 8.10.2010

Posted by TED Magazine on Tuesday, August 10, 2010

Construction employment edges down in July, spending up in June

    Nonfarm payroll employment fell by 131,000, seasonally adjusted, in July, “reflecting the departure of 143,000 temporary Census 2010 workers from federal government payrolls,” the Bureau of Labor Statistics (BLS) reported on Friday. Total private-sector employment rose by 71,000. “Thus far this year, private sector employment has increased by 630,000, with about two-thirds of the gain occurring in March and April,” BLS stated. The job loss in June was revised to 221,000 from the initial estimate of 125,000. The unemployment rate in July was 9.7%, not seasonally adjusted (9.5%, seasonally adjusted, matching the June rate). Construction employment dropped by 11,000, seasonally adjusted, to 5,573,000, a 14-year low. BLS said, “10,000 construction workers were off payrolls due to strike activity,” which has now ended. Construction job losses have moderated: the decrease from July 2009 to July 2010, 6.3% or 376,000 jobs, was only about one-third as large as a year ago. Among the five BLS construction categories, residential building contractors had the most severe losses, -1.7% for the month and -8.9% over 12 months; followed by residential specialty trades, -0.5% and -4.3%; nonresidential building, -0.3% and -5.4%; heavy and civil engineering, -0.1% and -3.6%; and nonresidential specialty trade contractors, +0.4% and -8.4%. The unemployment rate in construction fell to 17.3%, unadjusted, in July 2010, from 18.2% in July 2009, as the number of unemployed construction workers dropped to 1,528,000 from 1,687,000. Given the drop in employment over that span, the decrease in unemployment reflects workers who have left construction for other industries or have stopped looking for work in the past 12 months, not net hiring. Average hourly earnings in construction rose 4 cents in July to $25.19, seasonally adjusted, and 33 cents (1.3%) compared with July 2009. Architectural and engineering services employment, a harbinger of future demand for construction, edged up by 0.1% in July but fell 2.6% over 12 months.

   Construction spending in June totaled $836 billion at a seasonally adjusted annual rate, up 0.1% from the total for May but down 7.9% from June 2009, the Census Bureau reported on August 2. The May figure was revised down by $7 billion after the American Wind Energy Association reported lower investment in wind turbines. The monthly increase was limited to public construction, up 1.5% for the month and down 4.1% over 12 months. Public construction spending has increased in four of the past five months, possibly indicating a pickup in federal stimulus funding. Of the 13 public segments Census presents in its press release, 12 showed gains for the month, including highway and street construction (0.1% in June and 1.7% over 12 months). The only falling public category was educational construction (-3.2% and -22%). In contrast, private nonresidential spending dropped 0.5% and 24%, with all 11 segments showing year-to-year decreases. Results for the month were mixed: among the five biggest segments, power construction had the largest monthly gain (3.1%, -8.9%); the next largest were manufacturing (-4.2%, -33%); commercial—retail, wholesale and farm (-1.9%, -24%); health care (0.4%, -16%); and office (-1.1%, -38%). Private residential spending slipped 0.8% in June but climbed 12% from a year earlier. Of the three private residential segments, the largest was improvements—additions and major renovations to existing single- and multi-unit housing (-1.0%, 17%), followed by new single-family (-0.7%, 26%) and multi-family (0.3%, -52%).

   Despite the plunge in public school construction reported by Census, other sources suggest stimulus funding may help school construction. The National Clearinghouse for Educational Facilities (www.ncef.org) lists 12 stimulus spending programs administered by a variety of agencies and five tax provisions that universities, schools and daycare centers may qualify for. By NCEF’s count, the list of Build America Bonds posted by Bond Buyer (www.bondbuyer.com) includes at least $12.6 billion issued by school districts and $4 billion by higher education agencies, plus an unknown number of state and local governments that may be using bond proceeds for school projects. Bond Buyer also has a list (credited to Thomson Reuters) of more than 100 Qualified School Construction Bonds issued to date.

    New orders for U.S.-manufactured goods (excluding semiconductor manufacturing) fell 1.2% in June, seasonally adjusted, following a revised drop of 1.8% in May, Census reported on Tuesday. Orders were 15% higher in the first six months of 2010 than in January-June 2009. Orders for construction materials and supplies slipped 0.1% in June but rose 7.2% year-to-date. Orders for construction machinery, typically a volatile series, fell 23% for the month but doubled year-to-date.

   BLS on July 22 issued occupational pay comparisons among 79 metro areas for 2009. These “pay relatives control for differences among areas in occupational composition as well as establishment and occupational characteristics....to isolate the geographic effect on wages. To illustrate the importance of controlling for these effects, consider the following example. The average pay for construction and extraction workers in the Chicago-Naperville-Michigan City, Illinois-Indiana-Wisconsin metropolitan area in 2009 was $32.15,” 53% higher than the $20.98 average for the nation. “Controlling for differences in occupational composition, establishment and occupational characteristics, and the payroll reference date in Chicago relative to the nation as a whole, the pay relative for construction and extraction occupations in Chicago is 132.” The lowest pay relative was 67 in Brownsville-Harlingen, Texas.