The Data DIGest: 9.7.2010

Posted by TED Magazine on Tuesday, September 07, 2010

Private sector, construction add jobs in August; construction spending drops in July

   Nonfarm payroll employment in August fell by 54,000, seasonally adjusted, as layoffs of temporary Census workers swamped an increase of 67,000 in private-sector payrolls, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate in August was 9.6% (9.5%, not seasonally adjusted), up slightly from 9.5% in July. “In construction, employment was up by 19,000 in August; however, about half of the increase was due to the return of 10,000 workers to their jobs following a strike in July,” BLS Commissioner Keith Hall said in a statement. “On net, construction employment is about unchanged since March.” The construction unemployment rate in August was 17.0%, not seasonally adjusted, the highest August rate since BLS began calculating industry rates in 1976 and up from 16.5% a year before. (Unadjusted rates for industries with large seasonal swings, such as construction, should be compared only to the same month in past years, not across months. BLS does not disseminate seasonally adjusted industry rates.) Over the past year, seasonally adjusted construction employment declined by 274,000 (4.7%) with decreases in all five BLS categories: nonresidential specialty trade contractors, 123,700 (5.8%); residential specialty trade contractors, 63,200 (4.0%); residential building, 45,700 (7.4%); nonresidential building, 31,900 (4.5%); and heavy and civil engineering construction, 10,000 (1.2%). Architectural and engineering services employment, a harbinger of future demand for construction, was flat for the month and down 24,400 (1.9%) over 12 months. Average hourly earnings for all workers in construction rose 3 cents to $25.20 in August, seasonally adjusted, and 28 cents (1.1%) from August 2009.

   Construction spending fell 1.0% in July to a seasonally adjusted annual rate of $805 billion, a 10-year low and a drop of 11% from July 2009, the Census Bureau reported on Wednesday. Totals for June and May were revised down. Private nonresidential spending rose 0.8% for the month, due mainly to an 8% rise in power construction. But private nonresidential spending plunged 24% from a year earlier and all 11 of Census’ categories fell, most at double-digit rates. Public construction fell 1.2% for the month and 7.9% year-over-year as declining state and local spending evidently outweighed the boost from federal stimulus funds. The three biggest public categories declined over both spans: highway and street construction was down 2.9% and 7.0%, respectively; educational construction sank 0.1% and 19%; and transportation facilities fell 3.8% and 1.4%. Three categories that have recently received considerable stimulus funding rose: sewage and waste disposal, 2.5% and 11%; water supply, 2.2% and 0.7%; and public housing, 0.3% and 18%. Private residential spending dropped 2.6% for the third straight monthly decline since the homebuyer tax credit expired at the end of April, although the July total was 5.5% higher than in July 2009. Of Census’s three private residential categories, new single-family construction fell 2.5% for the month but rose 14% from a year ago; new multi-family fell 1.5% and 52%; and improvements to existing units fell 2.9% in July but increased 12% from a year earlier.

   Prices for some construction inputs are rising. Copper futures closed Thursday at $3.49, up more than 25% from last spring. “Although domestic demand for many commodities remained weak in July and August, prices for some commodities, such as scrap steel, rebounded in August due to increased foreign demand,” Jim Sobeck, president of New South Construction Supply (jim.sobeck@newsouthsupply.com), wrote on August 25. “There are still shortages of some types of resins used in the manufacture of construction materials, which has resulted in resin suppliers continuing to raise prices in August and announcing increases for September.…[D]omestic rebar mills, led by Nucor, announced on August 11th that they will increase prices for their September rollings by $25.00/ton….Although rebar prices have firmed up recently, demand remains weak and prices to contractors remain lower now than what they will be in September….Concrete reinforcing wire mesh prices remained stable in August after falling modestly in mid-July by approximately 3%. Wire rod prices are anticipated to rise in September, due [to] the increase in scrap steel, but as demand remains weak, wire mesh manufacturers are expected to hold the line on prices for September shipments. Polyethylene C & A film manufacturers increased prices by 10% in August, as resin prices increased by a whopping $.15/pound since mid-July. Resin manufacturers have announced another price increase for September orders of $.05 to $.06/pound as certain types of polyethylene resins remain in short supply. As resin prices will increase in September, most polyethylene C & A film manufacturers have announced they will increase prices by another 5% by mid September….Although wire rod prices are expected to increase in September, masonry reinforcing manufacturers have adequate inventories of rod for their anticipated demand in September and do not feel that the industry will support an increase at this time….Several manufacturers of caulking and joint sealants have either already increased prices or have announced increases for September, due to increased costs for raw materials over the past several months.” In contrast, liquid asphalt prices have continued to fall. The Illinois Department of Transportation posted its monthly bituminous index on Thursday: $443.89 per ton, down $12.11 (2.7%) from August and the sixth straight drop, totaling $73.71 (14%), from the peak in March.

   New orders for U.S. manufactured goods (excluding semiconductor manufacturing) inched up 0.1% in July following a decrease of 0.6% in June, Census reported on Thursday. Orders for construction materials and supplies fell 2.5% in July and 0.5% in June. Orders for construction machinery jumped 16% in July after slumping 18% in June.