Submitted by the AGC.
Construction employment, seasonally adjusted, totaled 7,613,000 in February, an increase of 60,000 from the upwardly revised January total, according to AGC’s analysis of Bureau of Labor Statistics (BLS) data posted today. The February total was an increase of 305,000 (4.2%) year-over-year (y/y) from February 2021 and was only 11,000 (-0.1%) below the pre-pandemic peak in February 2020. Residential construction employment, comprising residential building and specialty trade contractors, rose by 31,000 in February and 135,400 (4.5%) y/y, putting the total 160,000 (5.4%) higher than in February 2020. Nonresidential construction employment—building, specialty trades, and heavy and civil engineering construction—rose by 29,400 for the month and 169,400 (3.9%) y/y but remained 171,000 (-3.7%) below the February 2020 level. The number of unemployed jobseekers with construction experience dropped 26% y/y to 677,00, and the industry’s unemployment rate declined from 9.6%, not seasonally adjusted, in February 2021 to 6.7% last month.
Average hourly earnings for “production and nonsupervisory employees” in construction (mainly, hourly craft workers) increased by 6.0% y/y to $31.62, seasonally adjusted, in February 2022, BLS data posted today. The increase was the steepest since December 1982. However, the average for the overall private sector rose even faster, by 6.7% y/y to $26.94. Although the average for construction topped the all-private average by 17.4% in February, this “premium” has narrowed steeply from an average premium of 20-23% annually from 2005 to 2019. Since the pandemic began, other sectors have raised starting wages sharply, offered signing and retention bonuses, and–for some jobs–flexible hours or work locations, inducements that are not possible for onsite construction jobs. These conditions imply construction firms are likely to have a harder time attracting and retaining workers or will have to raise pay even more.
The war in Ukraine and Western countermeasures have continued pushing up the price of numerous commodities. Futures prices for copper and aluminum set all-time highs on Thursday. The national retail average price of on-highway diesel fuel was $4.10 per gallon, the Energy Information Administration reported on Monday, a nine-year high and an increase of $1.03 (34%) year-over-year (y/y). Supply chains have been further disrupted as ships have been trapped by the fighting, held in ports elsewhere, or had cargos detained. However, the war may also slow economic growth in Europe, cutting into demand for some materials.
Construction spending (not adjusted for inflation) totaled $1.68 trillion in January at a seasonally adjusted annual rate, up 1.3% from the upwardly revised December total and 8.2% y/y from January 2020, the Census Bureau reported on Tuesday. Spending exceeded the January 2020 rate, just before the pandemic hit, by 13%. Trends differed sharply among segments over the month, year, and two years. Private residential construction spending increased 1.3% for the month and 13% y/y. Residential construction was 40% higher than two years ago. Single-family spending climbed 1.2% and 15%, respectively; multifamily, -0.1% and 4.8%; and owner-occupied improvements, 1.8% and 14%. Private nonresidential construction spending rose 1.8% for the month and 7.3% y/y but still lagged the January 2020 rate by 5.7%. The largest private nonresidential segment—power—rose 2.7% for the month but declined 1.4% y/y (including electric power, up 2.8% for the month but down 1.1% y/y, and oil and gas field structures and pipelines, 2.3% and -2.3%, respectively); followed by commercial, down 0.5% for the month but up 18% y/y (including warehouse, up 0.8% and 22%, respectively, and retail, -4.0% and 15%); manufacturing, 8.5% and 31% y/y (including chemical and pharmaceutical, 4.1% and 0.7%, and computer/ electronic/electrical, 30% and 228%); and office, -0.1% and 1.7%. Public construction spending increased 0.6% for the month but declined 1.3% y/y and 4.7% over two years. The largest public segment, highway and street construction, inched down 0.1% for the month but climbed 5.2% y/y. Public education construction was flat for the month but skidded 9.9% y/y. Public transportation construction rose 1.6% and 0.1%, respectively.
“Economic activity has expanded at a modest to moderate pace since mid-January,” the Federal Reserve reported on Wednesday in the latest “Beige Book.” The Beige Book is a summary of informal soundings of businesses in the 12 Fed districts. The cutoff date for this report was February 18, six days before Russia invaded Ukraine. “Many districts reported that the surge in COVID-19 cases temporarily disrupted business activity as firms faced heighted absenteeism….All districts noted that supply chain issues and low inventories continued to restrain growth, particularly in the construction sector….Firms continued to increase compensation and introduce workplace flexibility to attract workers—especially in historically low-wage positions—with mixed success. Contacts reported they expect the tight labor market and consequent strong wage growth to continue, though a few districts reported signs of wage growth moderating. Prices charged to customers increased at a robust pace across the nation. A few districts reported an acceleration in prices. Rising input costs were cited as a primary contributing factor across a broad swath of industries, with elevated transport costs particularly significant. Labor cost increases and ongoing materials shortages also contributed to higher input prices…. Firms reported they expect additional price increases over the next several months as they continue to pass on input cost increases.”