Construction employment hits 5½ year high in November; spending climbs in October
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Nonfarm payroll employment increased by 321,000 in December, seasonally adjusted, and by 2,734,000 (2.0%) over 12 months, the Bureau of Labor Statistics (BLS) reported on Friday. Construction employment rose by 20,000 for the month and 213,000 (3.6%) over the year to 6,109,000, the highest total since April 2009. Residential construction employment (residential building and specialty trade contractors) climbed by 16,700 for the month and 122,800 (5.6%) for the year. Nonresidential employment (building, specialty trades, and heavy and civil engineering construction) increased by 3,600 in November and 90,100 (2.4%) year-over-year. Average hourly earnings for all employees in construction rose 2.7% from November 2013 to November 2014, the largest year-over-year increase since September 2009 and double the 1.3% increase recorded a year earlier. The number of jobseekers who last worked in construction hit an eight-year low of 629,000 and their unemployment rate fell to the lowest November level in seven years: 7.5%, down from 8.6% a year ago and a November peak of 19.4% in 2009. (Industry unemployment data are not seasonally adjusted and should only be compared year-over-year, not across months.) The rising wages, along with the steep decline in unemployment, suggest that experienced workers are becoming increasingly scarce.
Construction spending in October totaled $971 billion at a seasonally adjusted annual rate, an increase of 1.1% from the upwardly revised rate in September and up 3.3% from October 2013, the Census Bureau reported on Monday. Private residential spending rose 1.3% for the month and 1.9 % over the latest 12 months; private nonresidential spending, -0.1% and 6.4%, respectively; and public construction spending, 2.3% and 1.5%. Of the three residential components, new single-family construction rose 1.8% in October and 13% year-over-year; new multifamily, 1.0% and 27%, respectively; and improvements to existing residential structures, 0.6% and -19%. The largest private nonresidential segment was power construction (including conventional and renewable power plus oil and gas fields and pipelines), which fell 1.9% for the month but edged up 0.3% year-over-year. The next largest private segments (in descending order of current size) were manufacturing, which jumped 3.4% and 23%, respectively; commercial (new and renovated retail, warehouse and farm), -2.6% and 9.3%; and office, 0.8% and 21%. Of the top two public segments, highway and street construction rose 1.1% for the month but inched down 0.1% over 12 months, while public educational spending increased 2.2% and 6.1%, respectively.
Construction employment, not seasonally adjusted, increased from October 2013 to October 2014 in 228 of the 339 metro areas (including divisions of larger metros) for which BLS provides construction employment data, decreased in 64 and was stagnant in 47, according to an AGC analysis released last Wednesday. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) Houston-Sugar Land-Baytown added the most jobs in the past year (12,900 construction jobs, 7%), followed by the Dallas-Plano-Irving division (11,000 combined jobs, 9%) and the Chicago-Joliet-Naperville division (9,200 construction jobs, 7%). The largest percentage gains occurred in Pascagoula, Miss. (28%, 1,800 combined jobs), Terre Haute, Ind. (24%, 1,000 combined jobs) and Cleveland-Elyria-Mentor (21%, 7,800 combined jobs). The largest job losses were in the metro divisions of Bethesda-Rockville-Frederick, Md. (-4,500 combined jobs, -14%), Edison-New Brunswick, N.J. (-3,000 combined jobs, -7%) and Gary, Ind. (-2,800 construction jobs, -15%). The largest percentage declines for the past year were in Steubenville-Weirton, Ohio-W.Va. (-36%, -800 combined jobs), Fond du Lac, Wis. (-15%, -400 combined jobs), Gary and Bethesda-Rockville-Frederick.
“Reports from the 12 Federal Reserve districts suggest that national economic activity continued to expand in October and November,” the Fed reported last Wednesday in its latest “Beige Book,” a compilation of informal soundings of business conditions in the districts (which are referenced by the name of their headquarters cities). “A number of districts also noted that contacts remained optimistic about the outlook for future economic activity....Construction and real estate activity expanded overall, but at a pace that varied by sector and by district….Chicago and Dallas indicated that shipments of construction materials increased. Manufacturers of heavy machinery in the Chicago district cited improvements in sales of construction machinery…Residential construction increased on balance across the districts and multifamily construction remained stronger than single-family construction in a number of districts….Nonresidential construction rose in most districts. Construction of office space was relatively strong in some large urban areas, such as New York City and Philadelphia. Industrial construction was particularly strong in the Cleveland, Chicago and Dallas districts.”
“There were 3.93 million births in the United States in 2013, down less than 1% from 2012 and 9% from the 2007 high,” the Centers for Disease Control and Prevention reported last Thursday. “The U.S. general fertility rate was at an all-time low in 2013” of 1.86, compared with a rate of 2.1 needed to keep population stable (in the absence of net immigration). Declining population growth implies slowing demand for many types of construction, and eventually less labor supply.
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