Wednesday, June 22, 2011

More states add jobs; construction cost squeeze worsens; nonres, housing starts rise

Seasonally adjusted nonfarm payroll employment increased in 22 states from April to May, decreased in 27 states and the District of Columbia, and was unchanged in Idaho, the Bureau of Labor Statistics (BLS) reported on Friday. Employment increased in 29 states from a year earlier and decreased in 11 states plus D.C. Construction employment increased from April to May in 23 states, dropped in 27 and was flat in D.C. Compared with May 2010, construction employment rose in 22 states plus D.C. (the largest positive count since February 2008) and declined in 28 states. Nationally, construction employment inched up 2,000 (0.04%) for the month and was unchanged from a year earlier. BLS combines mining and logging with construction in six states and D.C. to avoid disclosing data about industries with few employers. The largest year-over-year percentage gains in construction (or combined) employment were in Michigan, 5.2%, or 6,300 jobs; Hawaii, 4.2%, 1,200 combined jobs; Texas, 4.1%, 23,200 jobs; Tennessee, 4.0%, 4,200 combined jobs; and D.C., 3.8%, 400 combined jobs. Texas added the most jobs. The steepest declines were in Nevada, -10.8%, -6,500 jobs; Rhode Island, -10.0%, -1,600 jobs; Georgia, -8.5%, -12,700 jobs; Vermont, -7.9%, -1,100 jobs; and Colorado, -7.7%, -8,900 jobs. The largest number of construction job losses over the year was in Florida, -14,300 (-4.1%).

The producer price index (PPI) for finished goods rose 0.6% in May, not seasonally adjusted (0.2%, seasonally adjusted), and 7.3% over 12 months, BLS reported on Tuesday. The PPI for inputs to construction—a weighted average of the cost of all goods used in construction, plus items consumed by contractors, such as diesel fuel—increased 0.9% for the month and 7.5% year-over-year. Major contributors to the year-over-year jump were diesel fuel, up 40% despite a drop of 3.2% since April; copper and brass mill shapes, down 4.0% for the month but up 17% since May 2010; aluminum mill shapes, 2.6% and 11.9%, respectively; and steel mill products, 1.1% and 10.1%. The monthly rise was also fueled by the PPIs for gypsum products, up 4.3% in May but down 1.2% year-over-year; asphalt paving mixtures and blocks, up 3.2% and 4.5%, respectively; and plastic construction products, 1.8% and 3.9%. In contrast, the PPI for concrete products fell 0.1% in May and was flat year-over-year, and the index for lumber and plywood dropped 1.3% and 8.4%. The materials cost spike intensified the cost squeeze on contractors, who generally remained unable to pass higher prices through in bids. The PPI for new industrial building construction edged up 0.1% for the month and 1.1% year-over-year; offices, 0 and 1.5%; warehouses, 0 and 1.7%; and schools, 0 and 1.8%. The PPI for nonresidential new and repair work by concrete contractors rose 0.1% in May but fell 0.1% from May 2010; roofing contractors, 1.7% and 1.0%; plumbing contractors, 0.1% and 1.3%; and electrical contractors, 0 and 2.2.

The consumer price index for all urban consumers—probably the most widely followed measure of inflation—rose 0.5% in May, not seasonally adjusted (0.2%, seasonally adjusted) and 3.6% over 12 months, BLS reported on Wednesday. Thus, contractors are experiencing cost increases roughly double the perceived rate of general inflation.

The value of nonresidential construction starts in January through May combined rose 2.0% from the same year-to-date period in 2010, Reed Construction Data reported on Wednesday, based on data it collected. “Individual month of May starts were 26.5% above April (about 15% after seasonal adjustment) and 17% above last May,” Chief Economist Jim Haughey wrote. “May 2011 starts were slightly above the average starts level over the past year and were the highest total since last November.”

Privately owned housing starts in May climbed 3.5% above the upwardly revised April level at a seasonally adjusted annual rate but were 3.4% below the May 2010 rate, the Census Bureau reported on Thursday. Single-unit starts rose 3.7% for the month but dropped 8.9% year-over-year. Multi-unit starts gained 2.9% and 17.5% over the two intervals. Building permits, generally a reliable indicator of near-term future starts, rose 8.7% and 5.2% overall; rose 2.5% for the month and fell 6.9% year-over-year for single-unit permits; and soared 23% and 41% for the typically volatile multi-unit permits.

Industrial production (IP) in manufacturing grew 0.4% in May, seasonally adjusted, following a downturn of -0.5% (initially estimated as -0.4%) in April, the Federal Reserve reported on Wednesday. The index increased 3.7% since May 2010. IP for construction supplies jumped 1.4% in May and rose 4.0% year-over-year. Capacity utilization in manufacturing rose to 74.5% of capacity from 74.2% in April but was still below the March level (74.7%) and the 1972-2010 average (79.0%). Sustained IP gains and high capacity utilization can signal demand for manufacturing construction.

The latest Manpower Group survey of 18,000 U.S. employers, released on Tuesday, found 20% expect to add to their workforces and 8% expect a decline during the third quarter. “When seasonal variations are removed from the data, the Net Employment Outlook is +8%...a relatively stable pace compared [with the second quarter] and “a slight increase compared to one year ago.” The Net Employment Outlook was +11 for construction, ranking the industry eighth out of 11 industries with positive outlooks. The outlook was negative for government and education and health services. The outlook for construction rose from 6 in the second quarter, putting the industry among five sectors that anticipate a “moderate” hiring increase. Employers in five other sectors anticipate a “slight” hiring increase. A “considerable” increase is expected in construction in the Northeast, “moderate” increases in the South and Midwest, and a “slight” increase in the West.

1 comment:

maddy said...

Great have done great effort. Thanks for sharing!

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